Brazilian Keynesian Review

Editorial

Brazilian Keynesian Review — 2024-12-17

The COVID-19 crisis and its initial impacts on emerging countries: an analysis based on the exchange rate pressure index

Adriano Sampaio — 2024-12-07

The objective of this article is to make an empirical characterization of the initial phase of the COVID-19 crisis, which caused greater turbulence on emerging countries, using an exchange rate pressure index that aims to measure the impacts on the exchange rate and international reserves. Conclusions: i) the most acute period of the crisis occurred in March/20, being among the three largest periods of exchange rate pressure since 2003 — behind October/08 and September/11; ii) Algeria, Brazil, Turkey, Pakistan, Nigeria, Angola and South Africa saw the most severe and persistent effects; iii) in most countries, the external adjustment occurred mainly through exchange rate devaluations — the same pattern as the 2008 crisis.

Regulation, Innovation and Coevolution in Financial Systems: An Analysis of the Impact of Restricted Effort Offering Regulation on Long-Term Financing in Brazil (2009 – 2021)

Ledson Luiz Gomes da Rosa — 2024-12-07

In Brazil, private financing instruments were inexpressive in the composition of non-financial firms’ obligations for a long time. The regulation of ‘restricted public offerings’ allowed firms to access investors in a more simplified and less costly way. This paper investigates how the adoption of such regulation impacted the supply of long-term finance in Brazil between 2009 and 2021. We use a Minskyan-evolutionary framework to assess how the Brazilian banking sector adapted itself to promote alternative long-term financing instruments, with a focus on corporate debt. Our conclusion points out that restricted public offerings reshaped the market for long-term financing in Brazil, allowing corporate bonds, a typical instrument of capital markets, to be used by banks as an extension of traditional loans, creating a hybrid capital market-loan instrument that was functional to financial institutions’ profitability and, at the same time, attractive to issuers (non-financial firms).

Instant payments and brazilian pix: lessons from the indian experience in the 2010’s

Tatiana Silveira Camacho — 2024-12-07

Instant payments are part of an ecosystem of financial innovations, promoting quick and easy access to funds. Through Nonlinear Distributed Lag Autoregressive Models (NARDL), this article aims to draw lessons from the Indian experience with the Unified Payments Interface (UPI), for the Brazilian Pix. The empirical results show that the substitutes for instant payments (credit and debit cards) have a complementary character, while the measure of relative popularity of mobile banking (MB/WLESS) and degree of sophistication of the financial system (M1/GDP) has immediate effects on these flows. Short-term negative asymmetric shocks had greater impacts on instant payment systems.

Preference for liquidity and financial investments of individuals in Brazil: an analysis by investor segments (2014-2021)

Roberto Rodrigues — 2024-12-07

Este trabalho analisa o comportamento das aplicações financeiras das pessoas físicas no Brasil entre 2014 e 2021 à luz dos principais indicadores macroeconômicos e sob a perspectiva keynesiana da preferência pela liquidez. A hipótese é que a lógica curto-prazista dos investidores continuou preponderante, a despeito da mudança brusca das condições econômicas, em especial, a vigência de taxas de juros historicamente baixas no período. A metodologia contempla três partes: uma análise teórica, com o marco analítico da teoria keynesiana; uma contextualização do tema, e, por fim; uma investigação empírica para compreender os determinantes das aplicações financeiras. Os principais resultados da pesquisa evidenciaram que a preferência pela liquidez e os motivos para demandar moeda tem relação com a dotação patrimonial, com prevalência do motivo precaução e maior preferência pela liquidez para os segmentos de menor renda, e prevalência do motivo especulação e menor preferência pela liquidez, para o segmento de maior renda.

Keynesian and post-Keynesian models on banks in Africa

Jacob Tche — 2024-12-07

In the present paper, we aim at filling the lacuna created by the lack of a multiplicity of empirical works on Keynesian and Post-Keynesian models on banks in Africa. Based on the case of banks and economic growth in 20 Sub-Sahara African countries for the 1990-2021periods, we employ the Granger causality tests in heterogeneous panels developed by Dumitrescu and Hurlin (2012), the Fixed Effect Ordinary Least Squares method, the Mean Group Method and the Generalized Method of Moments to conclude that, in the short and long run, economic growth precedes banks development as justified by Keynesian and Post-Keynesian bank models.

Modern Monetary Theory: Criticisms Through the Lenses of the Original Institutional Economics and the Non-Mainstream Macroeconomic Debate

Jan Klink — 2024-12-07

This paper aims at entering the contemporary debate around the propositions advanced by the Modern Monetary Theory (MMT) and the criticisms arising from the non-mainstream field of Economics. The main proposition of the article is that the MMT can earn more robustness and theoretical consistency against these criticisms through the recovery and incorporation of ideas of the Radical Institutional Economics found in the works of Karl Polanyi and Thorstein Veblen. Therefore, after a brief introduction, the paper performs a theoretical synthesis of some of the main concepts of these authors, followed by a presentation of the general ideas of MMT. In sequence, some criticisms to the MMT propositions, which exemplify the absence of a treatment of the impact of institutions in the configuration of macroeconomic states and trajectories, are addressed. In this sense, refocusing on this important dimension of the original institutionalism can contribute to the shaping of a research agenda that is fruitful for the MMT.

The Twin Deficits and the New Cambridge Approach: estimating the private expenditure equation for Brazil (2001-2018)

Giuliano Manera Longhi — 2024-12-09

The twin deficit hypothesis is a theoretical proposition that seeks to establish the causal relationship between the public budget and the external sector’s balance, the current account balance. Empirical studies try to gauge the causal relationship between the two balances, but the evidence does not form a consensus. This paper provides a critique of the methodology of such estimations, which do not elaborate on empirical, theoretical and methodological arguments to construct the econometric models for estimations. Conversely, we provide an alternative approach based on the modern New Cambridge approach, which does not assume the private sector as constant over time, to estimate a private expenditure equation for Brazil using quarterly data from 2001 to 2018. Results found agree with the critique to not assume the private sector as constant when constructing econometric models for Brazil in attempting to gauge at the causal relationship between the public budget and the current account balance. The private sector expenditure proves statistically significant with the stock of financial assets, stable relationship between private expenditure and private disposable income of the New Cambridge hypothesis, and that the housing sector is important in explaining private expenditure in the long run for Brazil.

Capital controls: the recent reorientation of mainstream economics and the structuralist- Keynesian approach

Diego Garcia Angelico — 2024-12-09

The article discusses capital controls in the mainstream economics view and the Keynesian-structuralist approach, arguing that although mainstream economics' recent reorientation on capital controls is notable, this new approach remains incomplete because it does not recognize the asymmetries inherent to the contemporary International Financial-Monetary System and its effects on economies. Therefore, the paper explains why mainstream economics advocates the use of capital controls only temporarily while the Keynesian-structuralist approach supports the use of permanent capital controls by countries, especially peripheral ones.

O que a análise dos tributos diretos no topo da distribuição nos informa sobre a desigualdade racial no Brasil?

João Pedro de Freitas Gomes — 2024-12-07

This paper analyzes the distributive impacts of direct taxes, considering dimensions of gender and race, using the 2017/2018 Brazilian Household Budget Survey data (POF). The analysis is centered on the top of the income distribution in which differences seem to be especially significant. In particular, the different incidence of direct taxes between white and black men is explored. While for white men, it is possible to notice a fall in the progressiveness of direct taxes comparing the top 1% with the following 9%, the same is not true for black men. This difference can be explained by the fact that the income of the black individuals at the top of the distribution come mostly from work, especially from formal employment regimes or statutory employment in the public sector. Among white men at the top of the distribution, on the other hand, a significant part of their income come from those who declare themselves employers, remunerated with income from capital. Such differences indicate possible ways to think about anti-racist elements of tax reforms. Given the discussion, in 2024, of a reform in direct income taxes, this article points out possible ways to design a more progressive tax, particularly considering the principle of tax equity.

PEC 65/2023 and the overlooked relationship between the Central Bank and the National Treasury

Larissa Naves Deus Dornelas — 2024-12-07

Dated November 27, 2023, Proposed Amendment to the Constitution No. 65 of 2023 provides for a change in the legal regime of the Brazilian Central Bank, which, from an autarchy, would become a public company, enjoying total financial autonomy. Despite the importance of the issue, the text justifying PEC nº65/23 does not present the necessary technical rigor about the suggested new institutionality of the Central Bank, either in legal terms or in economic terms. The aim of this paper is to help clarify the implications of this proposal, especially in view of the relationship between the Brazilian Central Bank and the National Treasury. Despite the idea of bringing Brazil into line with (some) international practices, PEC nº65/23 ignores the Monetary Authority's own state functions, as well as specific elements of the Brazilian economy in this area: its public debt market merged with the money market and the extremely high weight of repo operations in managing the liquidity of its currency.

Industrialização e desindustrialização no Brasil: teorias, evidências e implicações de política

André Roncaglia de Carvalho — 2024-12-07