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The Brazilian investment cycle: Financial fragility of the industrial sector

Investigacion Economica, ISSN: 2594-2360, Vol: 80, Issue: 317, Page: 35-57
2021
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Metric Options:   Counts1 Year3 Year

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Article Description

The 2008 international financial crisis hit the Brazilian economy in the ascending phase of an investment cycle. With a focus on industrial firms and based on Minsky’s definition of gross profit, we present arguments to explain how financial fragility of industrial firms has increased as the macroeconomic context deteriorated in the 2010s. The econometric exercise shows that the financial fragility of industrial firms can be explained by both macroeconomic variables, such as the evolution of credit to investment and interest rate, and sectoral variables, such as the industrial investment, the wage share and the composition of the receipts.

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