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    • The variable corresponding to the default rate of

    2018-11-15

    The variable corresponding to the default rate of individuals in the dynamic models presented a negative coefficient, showing that an increase in default by the borrowers leads to a reduction of banking spread in the expectation that this rate reduction will ease the payment of loans. The variable profit rate also showed a negative coefficient, indicating that an increase in bank profits allows these have some leeway to reduce their spreads in order to expand its market share. The banking spread will increase when the amount of loans of each commercial bank is high, which is similar to results found by Nakane (2001) and the same will occur when there are increases in the interest rate. This paper concludes that both macroeconomic and microeconomic factors are able to influence the level of banking spread in Brazil and that, if the assumption made by Afanasieff et al. (2002) is correct and macroeconomic measures to reduce the spread have already reached their limit, the measures taken by the Brazilian government are in a correct trajectory, in the sense of reducing banking spreads in the country by intensifying the use of microeconomic measures as encouragement to Tasquinimod in the banking sector promoted by public banks.
    Introduction In August 2011 the Brazilian government proposed a set of programs and economic actions to seek productivity growth and competitiveness of the economy. One of the first measures was a tax modification that replaced the payroll tax of labor-intensive firms by a tax on their revenues. The payroll tax rate of 20% was replaced by a tax rate of 1% or 2% of revenues of the benefited sectors. By the beginning of 2014, this measure has already included 56 sectors of the Brazilian economy . The rate of 1% applies on revenues of industrial sectors, whereas for services the tax rate is 2%. This change was not revenue neutral. In fact, the Secretariat of Federal Revenue of Brazil (RFB) estimates the revenue loss at 0.02% of GDP. In this paper we carried out some simulations to study the macroeconomic effects of this tax reform. We built a neoclassical model with a representative household, two intermediate firms – one labor-intensive and other capital-intensive – and a unique final good firm. Four scenarios were considered in the analysis: the first reform (referred to reform 1) replaces the payroll tax rate by a tax rate of 1% on revenue of the labor-intensive firm; the second reform (reform 2) considers a tax rate of 2% on revenue of the labor-intensive firms; the third simulation (reform 3) replaces the payroll tax rate by a tax (on revenue) which is government revenue neutral, and finally, the fourth tax change (reform 4) uses a payroll tax rate which implies the same level of government revenues losses of the first reform in the long term. Our model was based in Paes (2011, 2012). The rest of apnea paper proceeds as follows. In Section 2, we review the applied literature, while in Section 3, we describe the macroeconomic model used in this study. Section 4 contains the description of the model calibration and in Section 5, we discuss the results. Finally, in Section 6 we present the conclusions of this research.
    A review of literature There are many works that analyze the economic effects associated with tax changes. Studies based on dynamic general equilibrium models have been quite prevalent. As an initial reference, Fullerton (1982) used a neoclassical model to study the impacts of several tax reforms on the U.S. economy. Auerbach and Kotlikoff (1987) constructed an overlapping generation (OLG) model to analyze how changes in fiscal policies affect the American economy. In this paper, the authors evaluated some economic impacts of changes in the tax rates on income, wages, and consumption. Lucas (1990) studied the impacts of shifting capital income taxation to labor income taxation. Following a neoclassical perspective, Cooley and Hansen (1992) analyzed the economic effects of some tax changes that combine different rates for capital and labor income taxes. The results suggest that the welfare costs are strictly lower in economies that replace taxation on capital by other less distortive taxes such as consumption taxes.