More than eleven years after the end of hyperinflation in Brazil, domestic bond markets have been unable to lengthen the average maturity of both public and private bonds. This paper shows that the lengthening is theoretically and practically (we analyzed the experiences of Israel, Mexico and Poland), a consequence of persistent stabilization programs that successfully reduced systemic risk. Therefore, it is pointless to try to achieve the lengthening as an objective in isolation. It is necessary to improve the economic fundamentals that maintain a high level of systemic risk. Only in this context, measures that aim at lengthening bonds’ maturity will indeed produce positive results.
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Paper provided by Department of Economics PUC-Rio (Brazil) in its series Textos para discussão with number
515.
Length: 51 pages Date of creation: Mar 2006 Date of revision: Publication status: Published in "Edmar Lisboa Bacha; Luiz Chrysostomo de Oliveira Filho. Mercado de capitas e dívida pública: tributação, indexação, alongamento. Rio de Janeiro: Contra Capa, ANBID, IEPE/CDG, 2006" Handle: RePEc:rio:texdis:515
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Find related papers by JEL classification: E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Determination of Interest Rates; Term Structure of Interest Rates E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy F34 - International Economics - - International Finance - - - International Lending and Debt Problems H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
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