Fiscal Sustainability and Monetary Versus Fiscal Dominance: Evidence From Brazil, 1991-2000

Author/Editor:

Evan C Tanner ; Alberto M. Ramos

Publication Date:

January 1, 2002

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

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:

English

Publication Date:

January 1, 2002

ISBN/ISSN:

9781451842197/1018-5941

Stock No:

WPIEA0052002

Pages:

30

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