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

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.
Publication date: January 2002
ISBN: 9781451842197
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Inflation , Inflation , Economics- Macroeconomics , Economics- Macroeconomics , Intertemporal solvency , monetary and fiscal dominance , fiscal theory of the price level , primary deficit , price level , inflation , real interest rates , real interest rate , Macroeconomic - Aspects Of Public Finance , Macroeconomic Policy , And General Outlook , national

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