Author(s)

Margarida Gutierrez¹, Antonio Luis Licha², Raul Gouvea³

¹COPPEAD/Federal University of Rio de Janeiro (UFRJ), Rio de Janeiro, Brazil.
²Instituto de Economia/Federal University of Rio de Janeiro (UFRJ), Rio de Janeiro, Brazil.
³Anderson School of Management, University of New Mexico, Albuquerque, New Mexico, USA.

The purpose of this paper is to analyze the financial channels to finance Brazil’s fiscal expansion during the COVID-19 pandemic. We emphasize the changes in the financing conditions of Brazil’s fiscal deficit, showing that an increase in government’s expenditures resulted in the expansion of Brazil’s monetary base and in Brazil’s Central Bank open market operations. Moreover, we developed a financial agent model to demonstrate how the transmission mechanisms led to the monetary financing of Brazil’s fiscal strategy during the COVID-19 pandemic.

Fiscal Deficit Financing, Brazil, COVID-19 Pandemic

Gutierrez, M. , Licha, A. and Gouvea, R. (2023) Assessing Brazil’s Fiscal Deficit Financing Strategy during the COVID-19 Pandemic. Modern Economy, 14, 1536-1549. doi: 10.4236/me.2023.1411080.