Macroeconomics Fluctuations, Environmental Budget and Overshoot in Brazil: An Analysis via GMM System Approach

Macroeconomics Fluctuations, Environmental Budget and Overshoot in Brazil: An Analysis via GMM System Approach | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Macroeconomics Fluctuations, Environmental Budget and Overshoot in Brazil: An Analysis via GMM System Approach Benito Adelmo Salomão*, Daniel Caixeta Andrade This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-5528822/v1 This work is licensed under a CC BY 4.0 License Status: Published Journal Publication published 19 Mar, 2026 Read the published version in Journal of Economic Structures → Version 1 posted 5 You are reading this latest preprint version Abstract This paper investigates the short-term relationships between Brazilian macroeconomic aggregates and environmental budget through a system of simultaneous equations estimated by the Generalized Moments Method (GMM System), for quarterly data from 2003/1 to 2021/4. Three scenarios for environmental degradation were considered: i) a tight environmental budget (close to the ecological resilience threshold); ii) an environmental overshoot and (beyond the threshold); and iii) a comfortable environmental budget (well below the threshold). The results suggest that pollution shocks - proxied by increases in $CO_2$ emissions - can trigger the business cycle. These effects are more severe in scenarios of low or negative environmental budget. The estimated EE curve indicates that gains in industrial productivity significantly reduce environmental degradation. Moreover in overshoot scenarios, monetary policy also plays a role: higher interest rates lead to lower economic activity, indirectly improving environmental outcomes. However, when compared to productivity gains, this is only a second-best solution. JEL: Q50; Q56; Q57 Environmental budget Overshoot Ecological Macroeconomics GMM System Full Text Cite Share Download PDF Status: Published Journal Publication published 19 Mar, 2026 Read the published version in Journal of Economic Structures → Version 1 posted Reviewers agreed at journal 29 Sep, 2025 Reviewers invited by journal 29 Sep, 2025 Editor assigned by journal 25 Sep, 2025 First submitted to journal 23 Sep, 2025 Editorial decision: Minor revision 28 Dec, 2024 You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. 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