Impacts of the income transfer programs benefício de prestação continuada and Bolsa Família on the Brazilian economy: a computable general equilibrium analysis

Abstract

In this paper, we analyze the economic impacts of two important cash transfer programs in Brazil, the Bolsa Família and the Benefício de Prestação Continuada programs, using a CGE model of Brazil. The real value of those transfers between 2005 and 2012 were calculated and the shocks imposed to the model as shocks to household income. Three scenarios were analyzed, under different macroeconomic environments. Results show a fall in GDP when the transfers have to be funded by taxes on the domestic economy, while real household consumption increases in all simulations. GDP increases in the poorest regions, what shows an inter-regional income redistribution effect associated to those programs. The paper suggests that, contrary to recent findings in the literature on the topic, transfer programs cannot be regarded as economic growth programs, but as poverty alleviation programs only.