IDEAS home Printed from https://ideas.repec.org/a/ekm/repojs/v35y2015i3p426-443id232.html
   My bibliography  Save this article

The tripod traps of Brazilian macroeconomic policy

Author

Listed:
  • André Nassif

Abstract

This paper analyses the so-called tripod of the Brazilian macroeconomic policy, which since 1999 has been combining an inflation target regime, a floating exchange rate regime and targets for primary fiscal surplus. I argue that, unless its modus operandi is changed, the tripod will not be able to free the Brazilian economy from another “possible trinity”: high real interest rates, real exchange rate appreciation and very low economic growth. After briefly analysing the theoretical base under the macroeconomic tripod, I will show why this macroeconomic policy regime, if it is evaluated in a medium or long-term perspective, has not been able to assure neither price stability nor economic growth. In addition to the suggestion of breaking with the Brazilian strategy of growing with foreign savings, the paper also suggests three main ways of changing the modus operandi of the Brazilian tripod: i) increase the time horizon for reaching the inflation target, as has been the experience of most countries that adopt this monetary policy regime; ii) restore the countercyclical role of the Brazilian fiscal policy; and iii) adopt a mix of instruments aiming at preventing the Brazilian currency from entering into a new cyclical trend of appreciation in real terms. JEL Classification: E20; E31; E52; E62; F41.

Suggested Citation

  • André Nassif, 2015. "The tripod traps of Brazilian macroeconomic policy," Brazilian Journal of Political Economy, Center of Political Economy, vol. 35(3), pages 426-443.
    • Handle: RePEc:ekm:repojs:v:35:y:2015:i:3:p:426-443:id:232
    as

    Download full text from publisher

    File URL: https://centrodeeconomiapolitica.org.br/repojs/index.php/journal/article/view/232/222
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    inflation target regime; floating exchange rates regime; fiscal primary surplus; economic growth; price stability; Brazil;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ekm:repojs:v:35:y:2015:i:3:p:426-443:id:232. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Brazilian Journal of Political Economy (Brazil) (email available below). General contact details of provider: https://centrodeeconomiapolitica.org/repojs/index.php/journal/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.