Political Cycles in Latin America: More Evidence on the Brazilian Economy | LAER 30

This paper aims to shed additional light on the existence of opportunistic and partisan political-business cycles in the Brazilian economy over the 1996-2016 period. To that end, it relies on two different approaches: (I) an Oaxaca model in the spirit of Blinder and Watson (2016); and (II) a DSGE model where fiscal and monetary policies are treated as political- regime dependent (Milani, 2010). By and large, our results from both exercises show that there existed an opportunistic behavior by all the governments studied as regards fiscal policy, and that political ideology played a role in shaping macroeconomic policies in some of the administrations that ran the country within the time span considered. Specifically, as our DSGE exercise illustrates, President Dilma Rouseff’s fiscal management differed significantly from previous governments’. In addition, we do not find any evidence of political business cycle of any type when it comes to monetary policy, in line with what the consensus in this literature states for the case of Brazil.

Lee este artículo escrito por Celso J. Costa Junior, Alejandro Garcia Cintado y  Manuel Alejandro Hidalgo Pérez aquí

Latin American Economic Review aims to be the leading general interest journal on topics relevant to Latin America. The journal welcomes high-quality theoretical and quantitative papers on economic, social and political-economy issues with a regional focus. Articles presenting new data bases or describing structural reforms within a rigorous theoretical framework will also be considered. A few (illustrative) examples of topics that may be of special interest to this journal include: inflation, informal sector, corruption, crime, drug policy, unions, social exclusion, price controls, energy and environmental policy, natural resources, and technology transfer.