IDEAS home Printed from https://ideas.repec.org/p/pab/wpaper/19.09.html
   My bibliography  Save this paper

Political-Business Cycles in BRICS Economies: Evidence from Brazil

Author

Listed:
  • Celso José Costa Junior

    (Ministerio de Economía, Universidad Estadual de Ponta Grossa (UEPG) & Fundação Getúlio Vargas (FGV), Brasil)

  • Alejandro C. García Cintado

    (Universidad Pablo de Olavide (UPO) & UEPG)

  • Manuel Alejandro Hidalgo Pérez

    (UPO & Secretaría General de Economía – Junta de Andalucía)

Abstract

This paper uses a DSGE model with political-regime-dependent fiscal and monetary policies so as to examine political-business cycles in an emerging market such as Brazil under three different regimes – an "opportunistic regime" and "two partisan ones". The former regime seeks to identify whether within the period of seven quarters prior to the elections, the government manipulated the economy to increase the chances of getting reelected (or securing a successor). As for the latter two, they try to verify whether the macroeconomic strategies pursued by the "more leftist" governments differed from their "more right-wing" predecessors’ monetary and fiscal policies. Our results show that there exists an opportunistic behavior by all the governments studied as regards fiscal policy, and that from a macroeconomic viewpoint, President Rouseff’s administration fared differently than previous governments. However, monetary policy turns out to be independent of the regimes considered.

Suggested Citation

  • Celso José Costa Junior & Alejandro C. García Cintado & Manuel Alejandro Hidalgo Pérez, 2019. "Political-Business Cycles in BRICS Economies: Evidence from Brazil," Working Papers 19.09, Universidad Pablo de Olavide, Department of Economics.
    • Handle: RePEc:pab:wpaper:19.09
    as

    Download full text from publisher

    File URL: http://www.upo.es/serv/bib/wps/econ1909.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Alberto Alesina & Gerald D. Cohen & Nouriel Roubini, 1992. "Macroeconomic Policy And Elections In Oecd Democracies," Economics and Politics, Wiley Blackwell, vol. 4(1), pages 1-30, March.
    2. Castro, Marcos R. de & Gouvea, Solange N. & Minella, Andre & Santos, Rafael & Souza-Sobrinho, Nelson F., 2015. "SAMBA: Stochastic Analytical Model with a Bayesian Approach," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 35(2), March.
    3. Vergne, Clémence, 2009. "Democracy, elections and allocation of public expenditures in developing countries," European Journal of Political Economy, Elsevier, vol. 25(1), pages 63-77, March.
    4. Hibbs, Douglas A., 1977. "Political Parties and Macroeconomic Policy," American Political Science Review, Cambridge University Press, vol. 71(4), pages 1467-1487, December.
    5. Alberto Alesina & Nouriel Roubini, 1992. "Political Cycles in OECD Economies," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(4), pages 663-688.
    6. Alan S. Blinder & Mark W. Watson, 2016. "Presidents and the US Economy: An Econometric Exploration," American Economic Review, American Economic Association, vol. 106(4), pages 1015-1045, April.
    7. Fabio Milani, 2010. "Political Business Cycles In The New Keynesian Model," Economic Inquiry, Western Economic Association International, vol. 48(4), pages 896-915, October.
    8. Clémence Vergne, 2009. "Democracy, elections and allocation of public expenditures in developing countries," Post-Print hal-00368509, HAL.
    9. Kenneth Rogoff & Anne Sibert, 1988. "Elections and Macroeconomic Policy Cycles," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 55(1), pages 1-16.
    10. Schuknecht, Ludger, 2000. "Fiscal Policy Cycles and Public Expenditure in Developing Countries," Public Choice, Springer, vol. 102(1-2), pages 115-130, January.
    11. Nakaguma, Marcos Yamada & Bender, Siegfried, 2010. "Ciclos Políticos e Resultados Eleitorais: Um Estudo sobre o Comportamento do Eleitor Brasileiro," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 64(1), March.
    12. Celso Jose Costa Junior, 2016. "Understanding DSGE models [E-book]," Vernon Press Titles in Economics, Vernon Art and Science Inc, edition 1, number 164.
    13. Hibbs, Douglas A, Jr, 1986. "Political Parties and Macroeconomic Policies and Outcomes in the United States," American Economic Review, American Economic Association, vol. 76(2), pages 66-70, May.
    14. Celso Jose Costa Junior, 2016. "Understanding DSGE models [Paperback]," Vernon Press Titles in Economics, Vernon Art and Science Inc, edition 1, number 163.
    15. William D. Nordhaus, 1975. "The Political Business Cycle," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 42(2), pages 169-190.
    16. Rogoff, Kenneth, 1990. "Equilibrium Political Budget Cycles," American Economic Review, American Economic Association, vol. 80(1), pages 21-36, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Helene Ehrhart, 2013. "Elections and the structure of taxation in developing countries," Public Choice, Springer, vol. 156(1), pages 195-211, July.
    2. Eric Dubois, 2016. "Political Business Cycles 40 Years after Nordhaus," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01291401, HAL.
    3. Bove, Vincenzo & Efthyvoulou, Georgios & Navas, Antonio, 2017. "Political cycles in public expenditure: butter vs guns," Journal of Comparative Economics, Elsevier, vol. 45(3), pages 582-604.
    4. Margarita Katsimi & Vassilis Sarantides, 2012. "Do elections affect the composition of fiscal policy in developed, established democracies?," Public Choice, Springer, vol. 151(1), pages 325-362, April.
    5. Niklas Potrafke, 2006. "Political Effects on the Allocation of Public Expenditures: Empirical Evidence from OECD Countries," Discussion Papers of DIW Berlin 653, DIW Berlin, German Institute for Economic Research.
    6. Eric Dubois, 2016. "Political business cycles 40 years after Nordhaus," Public Choice, Springer, vol. 166(1), pages 235-259, January.
    7. Eric Dubois, 2016. "Political Business Cycles 40 Years after Nordhaus," Post-Print hal-01291401, HAL.
    8. Andrew Q. Philips, 2016. "Seeing the forest through the trees: a meta-analysis of political budget cycles," Public Choice, Springer, vol. 168(3), pages 313-341, September.
    9. Castro, Vítor & Martins, Rodrigo, 2018. "Politically driven cycles in fiscal policy: In depth analysis of the functional components of government expenditures," European Journal of Political Economy, Elsevier, vol. 55(C), pages 44-64.
    10. García, Israel & Hayo, Bernd, 2021. "Political budget cycles revisited: Testing the signalling process," European Journal of Political Economy, Elsevier, vol. 69(C).
    11. Annika Havlik & Friedrich Heinemann & Justus Nover, 2021. "Election Cycles in European Public Procurement," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 77(4), pages 376-407.
    12. Laopodis, Nikiforos T. & Merika, Anna A. & Triantafillou, Annie, 2016. "Unraveling the political budget cycle nexus in Greece," Research in International Business and Finance, Elsevier, vol. 36(C), pages 13-27.
    13. Klein, Fabio Alvim & Sakurai, Sergio Naruhiko, 2015. "Term limits and political budget cycles at the local level: evidence from a young democracy," European Journal of Political Economy, Elsevier, vol. 37(C), pages 21-36.
    14. Antoine Cazals & Pierre Mandon, 2016. "Political Budget Cycles: Manipulation from Leaders or Manipulation from Researchers? Evidence from a Meta-Regression Analysis," Working Papers halshs-01320586, HAL.
    15. Rabia Nazir & Muhammad Nasir & Idrees Khawaja, 2022. "Political Budget Cycle: A Sub-National Evidence from Pakistan," Journal of Business Cycle Research, Springer;Centre for International Research on Economic Tendency Surveys (CIRET), vol. 18(3), pages 343-367, November.
    16. Margarita Katsimi & Vassilis Sarantides, 2015. "Public investment and reelection prospects in developed countries," Southern Economic Journal, John Wiley & Sons, vol. 82(2), pages 471-500, October.
    17. Antoine CAZALS & Pierre MANDON, 2016. "Political Budget Cycles: Manipulation from Leaders or Manipulation from Researchers? Evidence from a Meta-Regression Analysis," Working Papers 201609, CERDI.
    18. Troeger, Vera & Schneider, Christina J., 2012. "Strategic Budgeteering and Debt Allocation," CAGE Online Working Paper Series 85, Competitive Advantage in the Global Economy (CAGE).
    19. Aidt, Toke S. & Mooney, Graham, 2014. "Voting suffrage and the political budget cycle: Evidence from the London Metropolitan Boroughs 1902–1937," Journal of Public Economics, Elsevier, vol. 112(C), pages 53-71.
    20. Linda G. Veiga & Georgios Efthyvoulou & Atsuyoshi Morozumi, 2018. "Political Budget Cycles: Conditioning Factors and New Evidence," NIPE Working Papers 21/2018, NIPE - Universidade do Minho.

    More about this item

    Keywords

    political cycles; monetary policy; fiscal policy; Oaxaca model; Dynamic Stochastic General Equilibrium (DSGE) model.;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pab:wpaper:19.09. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Publicación Digital - UPO (email available below). General contact details of provider: https://edirc.repec.org/data/deupoes.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.