Inflation and Finance: Evidence from Brazil
AbstractIn this paper we examine the impact of inflation on financial development in Brazil. The data available permit us to cover the eventful period between 1985 and 2002 and the results-based initially on time series and then on panel time series data and analysis, and robust for different estimators, specifications and financial development measures-suggest that high and erratic rates of inflation presented deleterious effects on finance at the time. The main policy implication arising from the results is that poor macroeconomic performance, exemplified by high rates of inflation, can only have detrimental effects on finance, a variable that is important for directly affecting, e.g., economic growth and development, and income inequality. Therefore, low and stable inflation is a necessary first step to achieve a more inclusive and active financial sector with all its attached benefits.
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Bibliographic InfoPaper provided by Department of Economics, University of Bristol, UK in its series The Centre for Market and Public Organisation with number 07/163.
Length: 23 pages
Date of creation: Jan 2007
Date of revision:
Financial development; inflation; growth; inequality; Brazil.;
Find related papers by JEL classification:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O54 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-03-10 (All new papers)
- NEP-DEV-2007-03-10 (Development)
- NEP-LAM-2007-03-10 (Central & South America)
- NEP-MAC-2007-03-10 (Macroeconomics)
- NEP-MON-2007-03-10 (Monetary Economics)
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