Vitor Kayo De Oliveira
Master's – EXPENDITURE AND TAX FISCAL MULTIPLIERS: A DSGE APPROACH FOR THE BRAZILIAN ECONOMY
Advisor: Profa. Dra. Fabiana Fontes Rocha
Comission: Profs. Drs. Márcio Issao Nakane, Vladimir Kühl Teles e José Angelo Costa do Amor Divino
Class: 215, FEA-5
The present work aims to primarily study the Brazilian fiscal policy impact on the economic activity via disaggregated fiscal multipliers and secondarily verify if the fiscal policy behavior is anticyclical, acyclical or procyclical. To do so, it estimates a DSGE model with a rich fiscal toolkit of disaggregated expenditures and taxes (public consumption, public investment, transfers and tax rates on consumption, labor income and capital income). Specially, it uses two different databases of effective tax rates which have not been used in the national literature in order to represent the model’s tax rates in the most reliable way. The results show that, in all the time horizons, the public investment multiplier is the greatest, while the transfers one is the smallest, and that the Brazilian fiscal policy is, in general, procyclical, contributing to amplify the business cycle. Additionally, the multipliers support the interpretation that the fiscal policy efficacy decrease in 2010-11 was due to the public investment loss of space in the relative composition of the fiscal stimuli. And the sensibility exercises reveal that the fiscal multipliers are higher when the fiscal policy is procyclical, shedding light on the importance of the fiscal behavior (anticyclical, acyclical or procyclical) in the fiscal multipliers calculation and pointing out that studies about economies characterized by procyclical fiscal policies, like the Brazilian one, that do not take into account this fiscal behavior tend to underestimate the multipliers.
*Abstract provided by the author