Currency Stabilisation under Conditions of International Capital Mobility: The Case of Brazil
AbstractThis paper challenges conventional interpretations of the real plan in two different ways. First, it argues that the contractionary monetary and fiscal policies that adorned its launch were largely irrelevant. Inflation was reduced primarily by the elimination of inertia and the repression of the distributive conflict through the internationalisation and liberalisation of the economy. Second, it shows that the plan is inconsistent, because it relies heavily on permanently high domestic interest rates in order to attract foreign capital. However, they destabilise the balance of payments and worsen the fiscal deficit endogenously.
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Bibliographic InfoPaper provided by London South Bank University CIBS in its series CIBS Research Papers in International Business with number 13-98.
Length: 29 pages
Date of creation: 1998
Date of revision:
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- de Carvalho, Fernando J Cardim, 1993. "Strato-inflation and High Inflation: The Brazilian Experience," Cambridge Journal of Economics, Oxford University Press, vol. 17(1), pages 63-78, March.
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"Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors,"
IMF Working Papers
92/62, International Monetary Fund.
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- Reinhart, Carmen & Calvo, Guillermo & Leiderman, Leonardo, 1993. "“Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors," MPRA Paper 7125, University Library of Munich, Germany.
- Cysne, Rubens Penha & Lisbôa, Paulo César Coimbra, 2004. "Imposto Inflacionário e Transferências Inflacionárias no Mercosul e nos Estados Unidos," Economics Working Papers (Ensaios Economicos da EPGE) 572, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
- Cardoso, Eliana A & Dornbusch, Rudiger, 1987.
"Brazil's Tropical Plan,"
American Economic Review,
American Economic Association, vol. 77(2), pages 288-92, May.
- Batista Junior, Paulo Nogueira, 1996. "Plano Real, Estabilização Monetária e Desequilíbrio Externo," Textos para discussÃ£o 50, Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
- Rudiger Dornbusch, 1997. "Brazil's Incomplete Stabilization and Reform," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 367-404.
- Cysne, Rubens Penha, 1993. "Imposto Inflacionário e Transferências Inflacionárias no Brasil," Economics Working Papers (Ensaios Economicos da EPGE) 219, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
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