This paper aims to derive an optimal monetary policy rule in a context of fiscal disequilibrium and to empirically test whether Brazil presents active or passive fiscal and monetary policies. We analyze the transmission channels of the fiscal and monetary policies through estimation of a Philips curve and the fiscal IS curve. The results indicate that the fiscal deficit is statistically significant and affects the inflation rate indirectly via output gap. The empirical findings using the Leeper model indicate that the monetary policy is passive whereas the fiscal policy is active. In this context, we found empirical evidence that the Brazilian economy shows a fiscal dominance regime for the period 1995: I to 2006: II.

Within a dynamic programming approach, an optimal rule for the central bank to attain its inflation targeting goals is derived. The short-run nominal interest rate is used as an instrument to achieve monetary objectives. The model is tested for the Brazilian economy and compared with results found for other countries. Evidence for the estimated feedback interest rule for the Central Bank suggests that the cost of reducing inflation in an open economy is lower than that of a closed economy.

Resumo: Este artigo analisa a duração dos atuais mandatos legislativos no Brasil e as conseqüências políticas resultantes da escolha destes parâmetros. Primeiramente, nós simulamos um modelo muito simples de seleção por competência para mostrar que os resultados explicam os longos mandatos adotados pelos países desenvolvidos parlamentatistas de Europa. Com base nos resultados da simulação, nós também sugerimos a taxa de reeleição como um indicador da maturidade eleitoral. Nós encontramos que nem a renda per capta, nem o fator ideológico explicam as diferenças nas taxas de reeleição nos estados do Brasil, mas o viés na representação dos estados explicam tais diferenças. Neste contexto, nós argumentamos que uma redução da duração do mandato legislativo no Brasil induziria a uma maior estabilidade política e a uma maior competitividade eleitoral Palavras-chave: termo legislativo, estabilidade política e competitividade eleitoralAbstract: This paper aims to put in evidence the current term lengths of legislative offices in Brazil and the political outcomes that results from the choice of these parameters. First, we simulate a very simple model of competence selection to show that the results explain the long terms adopted by the developed parliamentarist countries of Europe. Based on the simulation's results, we also suggest the reelection rate as an indicator of electoral maturity. We found that the income per capita doesn't explain the differences in the reelection rates in states of Brazil, neither does the ideological factor, but the bias in representation does explain those differences. In this context, we argue that a reduction of legislative's term lengths in Brazil would induce more political stability and electoral competitivity.