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Paulo Matos and Valdeir Monteiro
''A Note on the public investment-debt-cash linkages: a Brazilian cross-state analysis''
( 2023, Vol. 43 No.2 )
We propose a discussion on the recent situation of investment by state governments in Brazil. After stability between 2015 and 2018, and a real drop in the following years, states invested almost R$ 76 billion in 2021. This record value has been less financed by borrowing; in 2015 this dependence was 57.9%, and in 2021, 12.1%. Our main findings are based on the estimation of a dynamic balanced panel over the period from 2015 to 2021. We find significant elasticities of the investment to Net Current Revenue (NCR) in response to its own lag (-0.21), the lagged external debt to NCR (-0.07), the lagged domestic debt to NCR (-0.14), and the lagged cash to NCR (0.14). This finding suggests that public investments have reacted to ensure its sustainability, in response to observed changes in debt and cash.
Keywords: Dynamic balanced panel, Financing source, Public investment sustainability.
JEL: H7 - State and Local Government; Intergovernmental Relations: General
H6 - National Budget, Deficit, and Debt: General
Manuscript Received : Mar 21 2022 Manuscript Accepted : Jun 30 2023

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