The Macroeconomic Impact of Cash Transfers in Brazil

Feler, Leo; Mendes, Arthur; Miyamoto, Wataru; Nguyen, Thuy Lan; Pennings, Steven

Journal Article

The Macroeconomic Impact of Cash Transfers in Brazil

Abstract: Cash transfers are important fiscal policy tools for both advanced and developing countries. A study of one of the world’s largest cash transfer programs—Brazil’s Bolsa Familia—highlights the potentially large, positive, and persistent effects on the regional economy. Estimates using 2004-2019 data show that Brazilian states receiving 1% of GDP in extra transfers grew at least 2 percentage points faster in the first year. The transfers generate substantial increases in regional formal and informal employment. These effects are larger than those documented in advanced countries like the United States.

Keywords: fiscal policy; cash transfers; Brazil;