In this paper we investigate the real effects of fiscal policy in Brazil during the 1995-2008 period by estimating a VAR model that explicitly takes into consideration the role of public debt in the determination of fiscal variables, as recommended by (Favero & Giavazzi 2007). According to our results, it really makes a difference whether one takes into account the public debt's role in the fiscal policy process; more specifically,models that omit the public debt are likely to overestimate the real effects of fiscal policy shocks.
CITATION STYLE
Cavalcanti, M. A. F., & Silva, N. L. C. (2010). Dívida pública, política fiscal e nível de atividade: Uma abordagem var para o Brasil no período 1995-2008. Economia Aplicada, 14(4), 391–418. https://doi.org/10.1590/S1413-80502010000400007
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