Tax reform under fiscal stress: a CGE analysis of the Brazilian tax reform

In spite of a general agreement over the distortion imposed by the current Brazilian tax system, attempts to reform it during the last decade have faced several restrictions to its implementation. Two of these restrictions were particular binding: a) fiscal adjustment restriction (public sector debt cannot increase), b) fiscal federalist restriction (revenues from individual states and municipalities cannot decrease). This paper focuses on a specific reform that overcomes in principle the fiscal federalist restriction. Using Auerbach and Kotlikoff (1987) model calibrated for the Brazilian economy, I analyze the short and long run macroeconomic effects of this reform subject to the fiscal adjustment restriction. Finally, I look at the redistributive effects of this reform among generations as a way to infer about public opinion���s reaction to the reform. The reform consists basically of replacing indirect taxes on corporate revenues, which I show to be equivalent to a symmetric tax on labor and capital income, by a new federal VAT. The reform presented positive macroeconomic effects both in the short and long run. Despite a substantial increase in the average VAT rate in the first years after the reform, a majority of cohorts experienced an increase in their lifetime welfare, being potentially in favour of the reform.

Linkages between pro-poor growth, social programmes and labour market : the recent Brazilian experience

From a methodological point of view, this paper makes two contlibutions to the literature. One contribution is the proposal of a new measure of pro-poor growth. This new measure provides the linkage between growth rates in mean income and in income inequality. In this context, growth is defined as pro-poor (or anti-poor) if there is a gain (or loss) in the growth rate due to a decrease (or increase) in inequality. The other contribution is a decomposition methodology that explores linkages between three dimensions: growth pattems, labour market performances. and social policies. Through the decomposition analysis, growth in per capita income is explained in terms of four labour market components: the employment rate. hours of work, the labour force participation rate. and productivity. We also assess the contribution of different nonlabour income sources to growth patterns. The proposed methodologies are then applied to the Brazilian National Household Survey (PNAD) covering the period 1995-2004. The paper analyzes the evolution of Brazilian social indicators based on per capita income exploring links with adverse labour market performance and social policy change, with particular emphasis on the expansion of targeted cash transfers and devising more propoor social security benefits.

Public debt management, monetary policy and financial institutions

Despite the large size of the Brazilian debt market, as well the large diversity of its bonds, the picture that emerges is of a market that has not yet completed its transition from the role it performed during the megainflation years, namely that of providing a liquid asset that provided positive real returns. This unfinished transition is currently placing the market under severe stress, as fears of a possible default from the next administration grow larger. This paper analyzes several aspects pertaining to the management of the domestic public debt. The causes for the extremely large and fast growth ofthe domestic public debt during the seven-year period that President Cardoso are discussed in Section 2. Section 3 computes Value at Risk and Cash Flow at Risk measures for the domestic public debt. The rollover risk is introduced in a mean-variance framework in Section 4. Section 5 discusses a few issues pertaining to the overlap between debt management and monetary policy. Finally, Section 6 wraps up with policy discussion and policy recommendations.

Fiscal adjustment, conditionality and politics in IMF programs

A common feature in programs of the International Monetary Fund (IMF) is the use of conditionalities, macroeconomic and structural measures that a requesting country should adopt to obtain an assistance package. The objective of this work is to conduct an empirical analysis of the economic and political determinants of such conditionalities. In particular, our main contribution consists in the development of a new measure of conditionality, fiscal adjustment, and its comparison with the most used in the literature, the number of conditions. We choose fiscal adjustment because it is an adequate proxy for program austerity, since its implementation carries economic and political costs. In the empirical exercise, we use data from 184 programs in the period of 1999 and 2012, and estimate how our two measures of conditionalities respond to the economic and political factors. Our results suggest that they are quite different. The main determinant of the number of conditions is the political proximity of the borrowing country to the Fund���s major shareholders, the members of G5. On the other hand, the main determinant of fiscal adjustment is the size of the government fiscal deficit. Finally, we did not find correlation between the size of fiscal adjustment and the number of conditions. These results suggest that the analysis of the content of IMF programs should take into account the different measures of agreed conditionality.

Como s��o os la��os do capitalismo brasileiro? As ferramentas jur��dicas e os objetivos dos investimentos por participa����o da BNDESPAR

O BNDES tem o objetivo de financiar empreendimentos que se relacionem com o desenvolvimento do pai��s, sendo uma de suas modalidades o investimento por subscric��a��o de ac��o��es. De um lado, tem-se que as regras elaboradas na estruturac��a��o societa��ria de uma empresa podem variar de acordo com a origem do financiamento obtido, em func��a��o dos interesses que os diferentes investidores procuram proteger a partir da separac��a��o entre a sua propriedade e o controle. Por outro lado, o cena��rio econo��mico brasileiro passou por mudanc��as profundas nos u��ltimos 60 anos, ja�� que o modelo de industrializac��a��o baseado no dirigismo estatal ��� que marcou as de��cadas de 1950 a 1980 ��� transformou-se com o movimento de desestatizac��a��o dos anos 1990. O Estado na��o se afastou da propriedade empresarial, mas atua agora principalmente como acionista minorita��rio. Hoje, paira du��vida acerca, em primeiro lugar, das reais motivac��o��es que levam determinadas empresas a receber participac��a��o do Sistema BNDES. Ale��m disso, ha�� pouca compreensa��o sobre os vei��culos juri��dicos que viabilizam essas relac��o��es pu��blico-privadas. A partir de algumas pesquisas sobre o banco, conclui-se que a atuac��a��o da sua subsidia��ria de participac��o��es, a BNDESPAR, na��o ultrapassa objetivos de maximizac��a��o de valor dos seus ativos. Na��o se descartou, no entanto, que a func��a��o do banco de desenvolvimento ��� incluindo a do seu brac��o de renda varia��vel ��� fosse implementar poli��ticas industriais, por mais que falhas pudessem vir a ocorrer nesse intento, reconhecido como um processo experimental. Assim, revelou-se quais interesses as regras de governanc��a corporativa das companhias abertas financiadas pela BNDESPAR por participac��a��o acomodam para a subsidia��ria, elucidando-se importantes caracteri��sticas do modelo contempora��neo de atuac��a��o empresarial do Estado e lanc��ando-se luz sobre os objetivos que o levam a investir diretamente como acionista no cena��rio atual. No caso da BNDESPAR, trata-se de agente em busca de equili��brio entre a maximizac��a��o de retornos e a poli��tica industrial. De uma maneira mais geral, o BNDES procura ser auto-sustenta��vel ��� como pre��-requisito para existir e cumprir sua missa��o ���, tratando sua subsidia��ria como a principal personagem desse objetivo dentro do Sistema. A BNDESPAR, por sua vez, acabou por se tornar executora de poli��tica voltada a apoiar a negociac��a��o das companhias brasileiras no mercado de capitais ��� atividade emanada da sua pro��pria burocracia.

���The Wire���: O que a s��rie de TV diz sobre os #baltimoreriots

N��o �� raro que o universo da fic����o se misture com a realidade nas redes sociais ��� sobretudo quando a fic����o ajuda a entender e explicar acontecimentos da política ou da economia, por exemplo. Foi o que ocorreu esta semana nos Estados Unidos, em virtude da mobiliza����o popular em Baltimore em protestos pela morte do jovem negro Freddie Gray sob cust��dia da pol��cia em 19 de abril. A prestigiada s��rie de TV americana ���The Wire���, produzida pela HBO de 2002 a 2008 e que aborda diversos prismas sociopol��ticos de Baltimore, vem sendo lembrada com frequ��ncia no contexto dos protestos.