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    • However notice that the negative time trend found for FHC

    2018-10-30

    However, notice that the negative time trend found for FHC\'s office is eliminated from the final model while it is still present during Lula\'s administration. This means that, although the intercept is higher under Lula, the difference between FHC\'s and Lula\'s approval rate decreases 0.25 percentage points each month, when controlled for a time trend and keeping everything else constant. The finding of a negative time trend is very important not only for estimation purposes: given the same economic conditions, Lula\'s head start in comparison to Cardoso disappears in 65.6 months (65.6 × 0,25 = 16.4%), when his predicted popularity would thus be higher than Lula\'s. However, there are two important remarks to be made. First, the interpretation of the time trend is very hard to make, as personal charisma is unlikely to be changing over time. It could be reflecting some missing variable that was affecting FHC\'s popularity more strongly than Lula\'s – Graph 1 may provide the reader with convincing visual evidence of the existence of a increasing approval rate for FHC, when compared to Lula\'s. Second, the negative value of the trend and its size are due to a scale choice. If we had chosen the logarithm of the minimum wage instead of the value in Reais, the parameter size would drop significantly (to −0.08), so we should not overstate the interpretation of the point estimate. In any case, it is possible to conclude that when controlled for the macroeconomic and political variables, a constant and deterministic time trends, differences between the presidents vanish as the sample grows.
    Concluding remarks Our paper showed that domestic economic and political indicators are able to explain and predict a significant part of presidential approval ratings in Brazil. The economic variables that seemed to be most strongly correlated to approval ratings, in a ceteris paribus interpretation, are the minimum wage and domestic unemployment. Domestic unemployment, in a though of price stability, seems to be penalizing the Brazilian population most, if one considers that this penalty is further reflected in a poor evaluation of the president (Annex A).
    Acknowledgements
    Introduction Governments around the world have engaged in active fiscal policies characterized by a significant increase of the public deficit, in response to the effects of the 2008 global crisis sparked by problems of funding and liquidity that began in the U.S. This has led in recent years to a rapid and significant increase in indebtedness, especially in countries of the Eurozone and the United States. In Brazil, the fiscal situation has also worsened since 2008, for two reasons. On the one hand, the tax exemptions granted by the federal government aggravated the fall in government revenue resulting from reduced economic activity due to the domestic effects of the external crisis. On the other hand, public spending continued to grow fast: between 2008 and 2010, the current expenditure of the Union accelerated, jumping from 23.08% to 26.08% of GDP (close to the record observed in 2006 of 26.61% of GDP). Due to a combination of declining revenues and increased spending, there was a significant reduction in the primary surplus of the public sector, from 4.15% in September 2008 (the start of the global crisis) to 1.17% of GDP in September 2009. As a result there was an increase in the debt/GDP ratio, from 40.0% to 44.9% in the same period. In this frameword, although the current Brazilian tax position is more comfortable than that observed in developed countries, it is appropriate to ask whether the public debt in Brazil is sustainable in view of the current fiscal policy. Several studies have attempted to answer questions similar to this at other moments of the Brazilian economy (and world). This is the case Rossi (1987), Pastore (1995), Rocha (1997), Bevilaqua and Werneck (1997) and Issler and Lima (1998). These studies, however, relate to the period prior to 1994 and roughly conclude that the Brazilian public debt sustainability to the mid-90s was achieved by increasing the tax burden and the collection of the inflation tax. One goal of our study is to extend the analysis to the more recent period, using the methodology followed by Luporini (2002), Tanner and Ramos (2002), Giambiagi and Ronci (2004) and Mello (2005), and to improve the database for the analysis, making use a time series of the public deficit not previously explored in the literature.