The effects of fiscal and productivity shocks on the economic cycles of Minas Gerais

Abstract

This work aimed to identify and compare the economic cycles of Minas Gerais and Brazil, from the perspective of fiscal and productivity shocks. The main results indicate a 91% agreement between cycles. Regarding persistence, technological shocks in both Minas Gerais and Brazil showed transient behavior. Additionally, there are differences in fiscal shocks, especially negative ones. Finally, the vector model indicates that TFP best explains the variance of business cycles in the two spatialities. However, fiscal shocks tend to explain more the variance of cycles in Minas Gerais.