Data and MethodologyThis section will project the parameters of the economic models through its data sources, sample size and obviously estimation techniques. This chapter consists of two parts. The first part will present the variables as well as the reasoning for their selection. The second part will test the variables through hypothesis testing to ensure a reasonable degree of adequacy for the regression analysis. Model specification The study takes a comparative approach to examine the effectiveness of fiscal policy in stimulating economic growth in periods of high and/or low economic activity in Brazil. This analysis will run a Dicky-Fuller test and an augmented Dicky-Fuller test to ensure adequate data before performing regression (OLS). Secondary data will be collected from the World Bank before being calculated on E-views (econometric software). The hypothesis tests will be validated by the tau test, to affirm the significance of the regression coefficients. (Gujurati 2003), F test for overall model significance (Patterson and Okafor 2007); (R2) provides information on the goodness of fit of a model (Gujurati 2003) and (Adjusted R2) presents the overall improvement in the significance of models when new terms are introduced or removed. Analysis of empirical and theoretical literature establishes the key effective fiscal and non-tax components of economic growth based on economic theories. The seven variables analyzed in the literature review are assumed to contribute to Brazil's economic growth. This study will therefore use all these explanatory variables to show their effectiveness in the economy, however in the event of strong collinearity, one or two variables will be d......middle of paper ......drained, and thus on ); purchases of plants, machinery and equipment; and the construction of roads, railways, including schools, offices, hospitals, private residential housing, commercial and industrial buildings, as well as net acquisitions of valuables are also considered training of capital. (Carvalho 2010) states that the “Growth Acceleration Plan” (see Appendix C) was the main contributor to Brazil's economic growth. Urbanization (% of population) Urban population refers to people living in urban areas as defined by national statistical offices. It is calculated using population estimates from the World Bank and urban ratios from the United Nations World Urbanization Outlook. (Galor, Oded, and David N. Weil. 2000.) Develops a unified growth model that captures the historical evolution of population and technology producing output growth. This is discussed in detail in Appendix B..