Fiscal Sustainability and Monetary Versus Fiscal Dominance: Evidence From Brazil, 1991-2000
Electronic Access:
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Summary:
Under a monetary dominant (MD) regime, the primary surplus adjusts to limit debt growth, permitting monetary policy to be conducted independently of fiscal financing requirements. In Brazil, some evidence favors an MD regime for 1995–97, but not for the decade of the 1990s as a whole. While fiscal adjustments of 1999 yielded a primary surplus of about 3 percent of GDP, consistent with solvency, a credible MD regime would require further adjustments of the primary surplus if debt increases, growth falls, or interest rates rise.
Series:
Working Paper No. 2002/005
Subject:
External debt Financial sector policy and analysis Financial services Fiscal consolidation Fiscal policy Interest payments Public debt Real interest rates Solvency
English
Publication Date:
January 1, 2002
ISBN/ISSN:
9781451842197/1018-5941
Stock No:
WPIEA0052002
Pages:
30
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