Interaction of the fiscal and monetary policy in Brazil during the first government dilma 2011 – 2014
International Journal of Development Research
Interaction of the fiscal and monetary policy in Brazil during the first government dilma 2011 – 2014
Received 06th September, 2018; Received in revised form 21st October, 2018; Accepted 19th November, 2018; Published online 26th December, 2018
Copyright © 2018, Vinicius Guilherme Cavalcante do Prado and Maria do Socorro Macedo Coelho Lima. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
The present paper aimed to analyze, through the macroeconomic variables, whether there was a price control by the public sector, which directly influenced the increase of the inflation rate. Therefore, a regression model with error correction (VEC) was adopted. The period of analysis comprised from 2011 to 2014 during the first Dilma Rousseff government. Therefore, the results indicate a high explanatory power of the NFSP and DIVPIB variables on the dynamics of inflation. However, the estimated model showed that the variables managed to correctly capture the effects of fiscal dominance on the price level of the Brazilian economy in such period. Finally, it is understood that the adjustment of administered prices could have happened gradually and that the increase in the interest rate did not have a great impact on the inflation, since this was caused by the control of prices and not by acceleration of the consumption, since that these prices do not change with the conduct of the monetary policy.
