FEATURES OF THE BRAZILIAN MODEL OF FISCAL REGULATION OF MILITARY SPENDING
Abstract
This article is devoted to a comprehensive study of the features of the Brazilian model of fiscal regulation of military expenditures in the context of the need to maintain a balance between defense requirements and stringent budgetary constraints driven by the pursuit of macroeconomic stability and public finance sustainability. The research methodology integrates qualitative and quantitative approaches. The quantitative element relies on econometric methods, specifically ordinary least squares (OLS) regression with standardized variables, to identify the nature of dependencies between military expenditures and key fiscal, political, and macroeconomic factors. This enables an assessment of the relative influence of each variable and the detection of expenditure dynamics trends. The results demonstrate that Brazilian fiscal rules effectively constrain the growth of military spending, maintaining it at relatively low levels while prioritizing the stabilization of public debt and budget deficits. To analyze the dependence of military spending on tax policy, external debt, political stability, social spending, and inflation, an ARDL regression model was constructed using standardized variables (z-score normalization). At the same time, this model imposes structural limitations on the modernization of the defense sector, particularly amid rising threats to the international order and technological competition, where the balance between fiscal discipline and strategic investments becomes critical. It has been proven that among the main factors of fiscal regulation, political factors, tax revenues, and the level of external debt have the most significant impact on the dynamics of military spending. The practical significance of the findings lies in providing evidence-based recommendations for improving fiscal policy through the introduction of more flexible mechanisms that combine budgetary restraint with strategic defense needs. The study can serve as a basis for international comparative analyses and policy formulation in countries facing similar economic and geopolitical challenges.
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