Marco Flávio da Cunha Resende

Fiscal policy and the substitution between national and foreign savings

Abstract This paper addresses the relationship between fiscal policy, the real exchange rate, national and foreign savings, and investment. It shows how the mechanism of the finance–investment–saving–funding Keynesian circuit (FISF) works in open economies. This is undertaken in an attempt to demonstrate that real exchange rate changes affect the FISF circuit in that they trigger the substitution between national and foreign savings. Thus, domestic investment causes savings, but the distribution of aggregate savings between its national and foreign components depends on the level of the real exchange rate. Finally, we show that if government budget deficits change relative prices in an economy, this worsens the current account balance by triggering substitution between national and foreign savings. Thus, the constraint on investment (and on growth) that can emanate from this process is one that emerges from external forces.

Metas de inflação, política monetária e investimento: um estudo para dezessete países

In this paper two hypotheses about the relationship between monetary policy and investment in the context of the inflation target system were tested. One of these hypotheses is based on the idea of neutrality of money, and the other hypothesis is based on the reject of that idea. An investment equation for seventeen economies using a piece-wise dummy variable was estimated by the Methodology of Panel Data. The results highlight that a negative correlation between current expectation of restrictive monetary policy and current investment rose after the inflation target system implementation.

Déficits gêmeos e poupança nacional: abordagem teórica

A consensus has not yet emerged about the relationship between budget deficit, external deficit and national saving. According to mainstream economic literature the budget deficit can cause an insufficiency of national saving for a given investment rate. In this case, the investment rate will not be reduced if foreign saving is absorbed, causing an external deficit. In general, the mechanisms through which budget deficits could cause current account deficits are not highlighted in the works about this theme. We arrive at the conclusion that there is not a systematic relationship between budget deficit, current account deficit and national saving and that when it happens it can be processed only through changes in the real exchange rate.

O circuito finance-investimento-poupança- funding em economias abertas

The finance-investment-savings-funding circuit in open economies. On monetary economies the Finance-Investment-Savings-Funding circuit (F-I-S-F) prevails. Investment precedes savings. This circuit was worked out for a closed economy. This study seeks to demonstrate that the circuit F-I-S-F also prevails for open economies. A second point studied in this paper relates the relationship between budget deficits and savings restriction for investment. Conclusions highlight that the circuit F-I-S-F prevails for open economies and that budget deficits do not cause savings restriction for investment. In some situations budget deficits transfer the effects of investment for national savings formation from domestic economy to the rest of the world.

Eficácia dos controles de capitais no Brasil: uma abordagem teórica e empírica alternativa

The aim of this paper is to evaluate the effectiveness of capital controls in Brazil, at the end of the 1990s. To do this, we test some hypotheses about capital controls in Brazil. The first hypothesis is that capital controls in Brazil were endogenous during the 1990s. The second one is that exogenous capital controls were more effective than the endogenous one. The third hypothesis is that capital controls by prices have the same effectiveness as quantitative controls when an external crisis is happening. To test these hypotheses the Autoregressive Vector method was used. This method is used in a pioneer way to test hypotheses about capital controls. The results highlight that capital controls in Brazil were endogenous and partially successful to obstruct the capital flight in 1999, although the exogenous controls seem to be more effective than the endogenous one. Another conclusion of the paper is that in periods of large financial instability only the quantitative capital controls are capable to obstruct all the capital flight.

Déficits gêmeos e taxa de câmbio real

A consensus has not yet emerged about the relationship between budget deficit, external deficit and national saving. According to mainstream economic literature, the budget deficit can cause an insufficiency of national saving for a given investment rate. In such cases, the investment rate will not be reduced if foreign saving is absorbed, thus causing an external deficit. This is the twin deficits hypothesis. This study seeks to test the hypothesis that the budget deficit causes a external deficit because it causes the appreciation of the real exchange rate. This paper concludes that there is no regular causal relationship between budget deficits and external deficits. This conclusion is empirically conformed by means of estimating a panel data model for 35 countries during the 1991-2000 period.

Causação circular do crescimento das economias em desenvolvimento: uma ponte entre as abordagens evolucionária e pós keynesiana

Based on the Post Keynesian approach and on the Evolutionary literature, this study seeks to demonstrate the causal relationships between the National Innovation System and the national and international financial systems. This study shows that there is a circular causation in the less developed economies that contributes to the immaturity of its National Innovation System and to its structural external vulnerability. Conclusions highlight that the cycles in the less developed economies mirror the cycles of international liquidity.

Uma extensão ao modelo Schumpeteriano de Crescimento Endógeno

In the Schumpeterian endogenous growth model, random innovations (technical progress) are the main element that explains economic growth. Empirical analyses suggest there are two variables that explain the introduction of innovations: a randomly variable and a deterministic trend. In this paper we add a deterministic variable to the basic Schumpeterian growth model. The introduction of a determinist variable improves the basic model. The new model reproduces several styled facts, which are shown in simulations.

Economic and Social Policies Inconsistency, Conventions, and Crisis in the Brazilian Economy, 2011–2016

Over 2004–2008 and 2009–2014 the Brazilian economy performed an average growth rate of 4.8% and 2.7% per year, respectively. After 2014, however, the economy emerged into a deep depression showing growth rates of -3.8% in 2015 and -3.6% in 2016. In view of that, this chapter aims to analyze the causes of the Brazilian crisis, based on a Post-Keynesian point of view to focus on two issues: (i) the inconsistency between the social and macroeconomic policies, in particular the exchange rate policy, adopted over 2003–2014; (ii) some macroeconomic policy mistakes and their inappropriate management by the government. At the first sight, those policies were intended to boost the agents’ confidence by creating an optimistic convention about the future of the Brazilian economy what would trigger the entrepreneurs’ animal spirits and investments. However, these policies had gone wrong and reached the opposite effect as we describe.

The finance-investment and saving-funding circuit in the closed and open economies with government

Abstract This contribution discusses the Finance-Investment and Saving-Funding (FISF) circuit regarding the closed and open economies with government. Moreover, we discuss the fiscal policy effects on aggregate demand and income in the FISF circuit context. Keynes explained the FISF circuit assuming a closed economy without government. The novelty of the current contribution is to analyze the abovementioned circuit in the closed and open economy context including government. We show that the basic features of the FISF circuit remain unchanged for the closed and open economies when government is considered in the circuit.