On-line version ISSN 1980-5330
BAER, Werner and COES, Donald V.. The impact of politics on fiscal behavior: the case of Brazil. Econ. Apl. [online]. 2006, vol.10, n.1, pp. 25-40. ISSN 1980-5330. http://dx.doi.org/10.1590/S1413-80502006000100002.
This paper examines the proposition that a government which faces an election or depends on general popular support to govern effectively will find it difficult to resist increasing expenditures or to raise taxes. The resulting fiscal deficits are then either financed by the central bank, which produces inflation, or by domestic and/or foreign borrowing, increasing the government's foreign or domestic debt. After a brief historical survey of Brazil, a method is use to test the validity of this hypothesis in a more formal way.
Keywords : fiscal deficits; politics; inflation; debt; robust regression.