ANALYSIS OF THE RELATIONSHIP BETWEEN SHORT AND LONG TERMS MONETARY AND FISCAL POLICY WITH ECONOMIC GROWTH IN BRAZIL: APPLICATION OF MODELS VEC

Abstract This paper aims to assess the relationship between short and long term monetary and fiscal policies, on the one hand, and economic growth in Brazil in recent years, on the other, after the implementation of inflation targeting system. This research question is justified to the extent that the recent macroeconomic imbalances lived in Brazil can be explained by the lack of coordination between monetary and fiscal policies. This study investigates the relationship between long-term equilibrium and the methodology of different vector error correction (VEC). The results illustrate the importance of monetary and fiscal policies as explanatory variables for the variations in the Brazilian GDP in the long term.