By Tatiana Acar
[7 min read]
Assessing how credibility affects both the economy and individuals in a tangible way is a complex issue in the economic debate. We can conceive the delicate concept of confidence through the image of a horse being trained to jump obstacles. In order to gain his trust, the athlete needs to show commitment and respect. With sufficient warning, the horse tends to follow his commands, and both will have a durable relationship. However, unexpectedly forcing it to jump will make the horse suspicious. If surprised, he can harm the athlete and destroy all the environment around him. Worse, once the trust is betrayed, it is hard to recover it. Brazil’s current crisis scenario could be linked to this metaphor since the fiscal misconduct seen in the last years has undermined the population’s confidence and generated great disarray among consumers, businesses, and investors. Output growth has fallen more than 7% in two years, causing unemployment more than doubling. Recovering the lost development will consume a large part of Brazil’s next presidential term, which has been predicted by some analysts already. But why has the country reached this stage? What is the relationship between credibility and the level of employment and income?
Credibility is built when people notice, over time, that the government has not only committed to the policy it communicated, but it has also managed to achieve its goals. When a government spends continuously and increasingly, uncertainty about the country’s fiscal solvency tends to be higher. Thus, the effect of fiscal stimulus on the economy and individuals might become counterproductive by pushing up long-term interest rates, inflationary expectations and undermining longer-term growth prospects. This puts the government into a dangerous vicious circle, as the fall in the output causes a drop on tax revenues, further increasing the fiscal imbalance.
by Gustavo Macedo
[8 minute read]
On March 14th, less than a month into a federal military intervention that is supposed to fix the security crisis in the state of Rio de Janeiro, the brutal assassination of a Rio de Janeiro’s Councilwoman, Marielle Franco, has dragged new actors into an already intricate political situation – and this time they are international. The United Nations (UN), which had already been expressing concerns about the unfolding political situation, may now dive into the story head first.
The case of Marielle meets all the criteria for setting the UN machinery in motion. Politically, the great commotion that the story of Marielle’s murder generated nationally in Brazil earned it international political attention, including that of the UN, an organization that strategically chooses to focus its work on emblematic cases that can serve as examples of the fight for human rights around the world. Technically, the history of other recent similar cases killings in Brazil, the profile of the victim, the circumstances of the crime, its modus operandi and the allegations of people close to the victim should, in theory, be sufficient in order for the case to be picked up by the UN.
by Rodrigo Schneider
[7 minute read]
In 2003, Brazilian Congress approved legislation that banned the carrying of concealed weapons nationwide and provided for a voter referendum 22 months later regarding whether to ban the sale of all firearms in Brazil. Whether this restrictive law was effective in reducing crimes is still controversial and I use a statistical design to identify the causal effects of this legislation and provide more explicit evidence to elucidate this law’s consequences.
by Vera Ceccarello and Tatiana Massaro
“You do not know me and you’ve never seen me. You live in a distant land.”
(Davi Kopenawa, Yanomamishaman)
During the final months of 2017, the Amazon has once again taken center stage of debates in the media and in civil society. The trigger was a decree from the interim government of Michel Temer that would allow the private initiative to explore an area of 46 thousand square kilometers known as Renca (National Reserve of Copper and Associates) – First Decree 9.147, August 28, 2017 [i]. The urgent character of the decree and the lack of dialogue with the population spawned massive controversies among government, environmentalists, the indigenous population and people worried about preserving the Amazon forest. Faced with several outrage demonstrations, the Brazilian government backtracked and suspended the decree on September 2018 during 120 days from this date (Second Decree 9.159, from September 26, 2017, revoking the first one) [ii].
Caption: Fig. 1. Part of RENCA (National Reserve of Copper and Associates)