Size of government and economic growth in the largest Latin American country

Mendonça, Hélder Ferreira de; Cacicedo, Thiago

doi:10.1080/13504851.2014.987909

Cited by 16 publications

(11 citation statements)

References 10 publications

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“…After estimates for business confidence, we analyze the influence of this variable on investment, and thus identify the transmission of political and economic policy uncertainties to investment through the expectations channel. Regarding the investment variable (INVEST) [17], we follow Acosta and Loza (2005), de Mendonça and Lima (2011), de Mendonça and Cacicedo (2015) and Degiannakis et al (2017) and use the gross fixed capital formation series. Figure 5 presents the graph related to INVEST.…”

Section: Methodsmentioning

confidence: 99%

Effects of economic policy uncertainty and political uncertainty on business confidence and investment

Montes

Nogueira

2021

JES

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PurposeThis study estimates the effects of political uncertainty and economic policy uncertainty on business confidence. Moreover, it also examines business confidence as a transmission channel of political uncertainty and economic policy uncertainty to investment.Design/methodology/approachThe study addresses the Brazilian case from May 2004 to December 2017. Brazil experienced situations of political instability and public distrust in government and its policies, which reflected on the economic environment. The study uses two business confidence indicators that capture entrepreneurs' sentiment in relation to their business and the economy. All models are estimated using ordinary least squares and generalized method of moments.FindingsThe estimates reveal that increases in both political uncertainty and economic policy uncertainty reduce business confidence. The findings also indicate that business confidence acts as a transmission mechanism, i.e. uncertainties affect investments through business confidence.Practical implicationsThe findings point to the following practical implications related to the existence of uncertainties in the Brazilian economy: different institutional difficulties and government indecisions have blurred the political scene and caused political uncertainties. In addition, the same aspects that blurred the political scene also caused uncertainties in relation to economic policy that undermined business confidence, and affected investment.Originality/valueThere is a vast literature on business confidence, as well as studies addressing the relationship between business confidence and investment. This study differs from other studies as follows: in addition to the political uncertainty, it also analyzes the effect of economic policy uncertainty on business confidence; it uses different measures to capture political instability, and it analyzes whether business confidence acts as a transmission channel of both uncertainties to investments.

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Section: Methodsmentioning

confidence: 99%

Effects of economic policy uncertainty and political uncertainty on business confidence and investment

Montes

Nogueira

2021

JES

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“…For example, some researchers, such as Landau (1983Landau ( , 1986, Barro (1991), Yamamura (2011), take government consumption over GDP as the measure of the government size, while others like Hsieh and Lai (1994), Chao and Grubel (1998), and Chen and Lee (2005) consider the share of total or central government expenditures in GDP at aggregate level. Some others, e.g., de Mendonça and Cacicedo (2015), take into account the central government or general government's tax revenue as a proportion of GDP. The possible impact of government size on unemployment differs in accordance with how to define or measure it.…”

Section: Theoretical Background To Government Size− − −mentioning

confidence: 99%

Government Size, Unemployment, and Inflation Nexus in Eight Large Emerging Market Economies

2018

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Using a panel of eight large emerging market economies from 1980 to 2015, this paper seeks to assess the causal linkages between government size, unemployment, and inflation. Overall, our results suggest that the government size is positively associated with both unemployment and inflation. The Granger causality runs from the government size to unemployment and to inflation. From our analysis, two aspects stand out. First, the effects of government size on unemployment and inflation depend essentially on how the government size is measured. As long as government consumption spending is considered as the proxy measure of the government size, the government size is significantly and positively correlated with unemployment, and with inflation. Second, indirect taxes, like government consumption spending, have a positive as well as statistically significant association with unemployment. However, the direct taxes solely exert a strong effect on inflation in the countries considered.

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“…For a complete description of these problems, see Afonso et al (2016), andmainly Holland (2019). The government's size and quality may represent a significant hurdle to better performance (see Mendonc ¸a and Cacicedo, 2014;Campos and Cysne, 2019;Hall and Jones, 1999). The increased number of municipalities allowed by the Constitution of 1988 in Brazil harms social indicators and public services overall.…”

Section: Introductionmentioning

confidence: 99%

Does fertility affect growth? Evidence and simulation results from alternative quantile regression estimators

Marques

2023

Preprint

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While the effect of various factors on fertility choice has been intensively studied, few studies identify declining fertility's impact on subsequent growth. We employ instrumental variables derived from spatial interactions across 5564 cities to identify the heterogeneous effects of declining fertility on subsequent economic growth in Brazil's city-level data. The gain by reducing one birth may translate to a cumulative growth increase of 0.5 percentage points in places where the pace of economic development is low. On the median, the extent of the estimate suggests that a unity decrease in the total fertility rate might lead to an increase in cumulative growth of 0.25 percentage points in the following ten years. The simulation results, designed for two-stage quantile regression estimators, indicate the sample sizes for which the asymptotic properties tend to hold and show that the convolution-smoothed approach with the triangular kernel performs better in finite samples in most scenarios.

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Size of government and economic growth in the largest Latin American country

Cited by 16 publications

References 10 publications

Effects of economic policy uncertainty and political uncertainty on business confidence and investment

Effects of economic policy uncertainty and political uncertainty on business confidence and investment

Government Size, Unemployment, and Inflation Nexus in Eight Large Emerging Market Economies

Does fertility affect growth? Evidence and simulation results from alternative quantile regression estimators

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