This is an archived version of the PW Sources newsletter from Saturday, March 30, 2024. Sign up to receive PW Sources directly to your inbox here.

FISCAL POLICY

As the Lula administration tries to balance spending with fiscal rules compliance, some investors have cast doubt on the government’s target of erasing Brazil’s primary fiscal deficit by next year.

In a PW essay from last October, CLARA BRENCK and PEDRO MARQUES examine the fiscal rule debate in Brazil:

“Like other Latin American economies, Brazil’s alternative measure for inflation control was based on the “macroeconomic tripod”: the floating exchange rate regime, inflation targeting, and establishment fiscal targets as part of a Fiscal Stabilization Program signed with the IMF. The arrangement made fiscal surpluses necessary to control public debt resulting from above-average real interest rates. The tripod was expected to promote inflation control, balance of payment equilibrium, and public debt stability in the medium run. Price stabilization, therefore, is at the origins of the rule-based fiscal policy in Brazil. Given the dependence on export revenues and foreign capital inflows, Brazil (and other Latin American countries) have always been sensitive to boom and busts in the global economy. When the latter experiences exceptional growth, it is likely that the former will have additional room for fiscal intervention. By contrast, when global economic trends recede, developing economies are exposed to liquidity shocks, an increased risk of balance of payment crises, and weakened capacity for tax collection and revenue generation. These changes, in turn, can affect fiscal rules compliance.”

+  “We analyze carbon emission sources and industrial structure in several developing countries and revisit global climate policy instruments to set up a more comprehensive decarbonization effort in developing countries. We advocate for the targeted use of green fiscal policy.” By Joao Paulo Braga, Erin Hayde, and Julia Torracca. Link. 

+  “It is important that the Brazilian G20 presidency vigorously defends proposals for debt relief or forgiveness for low-income countries—especially in a context of fiscal adjustment widely encouraged by the international monetary and financial systems.” By Bruno De Conti, Pedro Rossi, Arthur Welle, and Clara Saliba. Link. And Fernando Haddad on Brazil’s transition to a green economy. Link.

+  “Redistributive efforts undertaken by the Workers’ Party government (2000–2016) could not increase the wage share of income.” By Fernando Rugitsky and Pedro Romero Marques. Link. And from 2021, Lena Lavinas, Barbara Weinstein, and André Singer discuss Brazilian social policy in PW. Link.

NEW RESEARCHERS

Open Source Software

ANAMIKA SEN recently obtained her PhD in economics from the University of Massachusetts, Amherst. In an article coauthored with Curtis Atkisson and Charlie Schweik, she examines the cost-benefit distribution of Apache Software Foundation policies on entering open source software products. 

From the paper:

“In the early days of OSS, small groups of like-minded individuals would come together to work on a project of mutual interest. These self-governing projects were left to their own devices for survival, trying to maintain development and grow a user base on their own, operating under idiosyncratic norms and rules (Schweik and English, 2012). In the last 20 years, organizations have emerged as second-order actors in the production of OSS. They provide various collective services to aid OSS projects, such as legal, technical, and financial support (Riehle and Berschneider, 2012). A recent paper by Izquierdo and Cabot (2020) reports over 100 OSS nonprofit foundations exist today offering differing levels of support services. The Apache Software Foundation (ASF) – the focal nonprofit in this study – is one of the oldest such organizations with one of the largest numbers of associated OSS projects. A key service the ASF provides is the “incubation of podlings,” which is a mechanism and social process within the foundation to nurture OSS projects that are interested in becoming a project formally associated with the ASF. To achieve their goal of integrating new projects into the
ASF community, the ASF Incubator program has created policies or requirements that protect both ASF’s interests and, according to Apache, make OSS projects more sustainable (Khudairi, 2019).”

+ + +

+  “The idea of a self-coordinating competitive market was emphasized far more by the Progressive policy-makers and technocrats who did battle with the courts, albeit largely by asserting special exceptions to it.” New on PW, Sanjukta Paul on the National Industrial Recovery Act of 1933, its judicial reception, and the maturation of the self-coordinating market ideal. Link. 

+  “Though it coincided with the period of market reform, it was government restructuring rather than markets which encouraged the rise of China’s science, technology, and innovation sector.” Also new on PW, Yutao Sun, Cong Cao, and Yuehang Liu on the structural reconfigurations backing China’s investments in R&D. Link. 

+  On April 23rd at 12pm ET, join us for a for a discussion on profits, prices, and the green energy transition, on the occasion of the publication of Brett Christophers’s The Price Is Wrong, with Christophers, Melanie Brusseler, Kyle Chan, and Robinson Meyer. Link.

+  “However scarce the physical cocoa owned by commercial traders at those warehouses may be now, as traders are being served delivery notices for the expiring March futures contract, that record-high futures price truly is the price of the real stuff.” By Elaine Kub. Link. 

+  Matthew Soener suggests that IMF programs are linked to greater greenhouse emissions in the global South when borrowing conditions are inflexible. Link.

+  Ezra Oberfield, Esteban Rossi-Hansberg, Nicholas Trachter, and Derek T. Wenning on the spatial expansion of large banks in the ’80s and ’90s as determining conditions of local bank competition and interest rates for individuals and firms. Link.

+  “The Savings and Loan crisis of the late 1980s and early 1990s caused major disruptions in the flow of mortgage capital and encouraged the growth of the secondary mortgage market.” By Kevin Fox Gotham. Link.

+   “Exchange theorists argue: ‘Individuals do not assess rewards and costs, and make decisions or choices, as independent monads in a Hobbesian situation, but rather as ‘selves’ in an interpersonal matrix or field of at least partly matched or common symbols and intimate exchanges of information.’ The ‘intimate exchanges of information’ made by pretelegraphic entrepreneurs, like those made by modern business executives, usually consisted of local, regional or national, and international components. However, given the relatively small volume of pretelegraphic long-distance information flow, the local component was probably more important in relative terms between 1790 and 1840 than it is today. If so, and if group ‘influentials’ affected information receipt and attitude formation, while membership in informal and formal face-to-face groups tended to be locally restricted, then entrepreneurial attitudes in a pretelegraphic city ought to have resembled one another to the extent that group memberships, or private-information fields, overlapped one another.” By Allan Pred. Link.

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org