Mendonça, Mário Jorge Medrano, Luis Alberto Sachsida, Adolfo
Year of Publication:
Texto para Discussão, Instituto de Pesquisa Econômica Aplicada (IPEA) 1409
This article estimates the stance of fiscal policy using the framework of conditional forecasting to evaluate the stance in Brazil since 1997. This indicator is measured as the deviation of forecast of the output gap conditional to the observed values and steady-state values of the instruments of fiscal policy-the current government spending and the net tax. Our results indicate that fiscal stance has been neutral since 2004 but expansionary after 2007. There is no statistical evidence that fiscal policy is putting pressure on the inflation but there does exist statistical evidence that it has negatively affected the output gap.