Index of Macroeconomic Performance for a Subset of Countries: A Kaldorian Analysis from the Magic Square Approach Focusing on Brazilian Economy in the Period 1997-2012

Abstract

This paper aims to evaluate the macroeconomic performance of some chosen countries in the period 1997-2012 using the four variables that compose the “magic square” diagram suggested by Nicholas Kaldor (1971). In order to avoid problems with the variables’ scale, the standardized “Index of Economic Welfare” created by René A. Medrano-B and Joanílio R. Teixeira (2013) was utilized. The results showed a good performance of China and the Asian countries. Furthermore, in spite of the impact of the crises of 1998 and 2008 into Russia, this country presented a good recuperation and achieved a high index just after these crises. The Brazilian performance was somewhat surprising. The country showed a low growth rate and a progressive current account deficit, both typical of developed nations, along with a high inflation, typical of developing countries. A positive aspect seems to be the country’s capability of avoiding external crises, like the verified in 2008-2009.

Key words: Normalized magic square, Kaldorian approach, Index of economic welfare.
JEL: E6, E01, E31, F1.