TITLE:
Assessing Brazil’s Fiscal Deficit Financing Strategy during the COVID-19 Pandemic
AUTHORS:
Margarida Gutierrez, Antonio Luis Licha, Raul Gouvea
KEYWORDS:
Fiscal Deficit Financing, Brazil, COVID-19 Pandemic
JOURNAL NAME:
Modern Economy,
Vol.14 No.11,
November
22,
2023
ABSTRACT: 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.