Brazil's Fiscal Policy Dominance Shaping Monetary Decisions and Inflation Rates
The article examines how Brazil's monetary and fiscal policies interact and affect the economy. By analyzing data, the researchers found that Brazil's fiscal deficit impacts inflation indirectly through the output gap. The study suggests that Brazil's monetary policy is passive while its fiscal policy is active. This means that the government's spending decisions have a stronger influence on the economy than the central bank's interest rate policies.