This paper investigates the impacts of a very important credit policy in Brazil called Northeast Financing Constitutional Fund (FNE in Portuguese) using a dynamic and inter?regional computable general equilibrium model calibrated for 2013. Simulations were carried out based on FNE investment data for 2014 and 2015, allowing for isolation of the effect of the funding on macro regions. Results indicate that FNE expenditures between 2014 and 2015 would increase Northeast GDP by 3.51 percent by 2025. Estimates show a 0.46 percent decrease in regional inequality among Northeastern states measured by regional GINI. Results are compatible with the objectives of the fund, although the total effects, mainly on regional inequality, are quite modest.
