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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- Reinhart, Carmen & Calvo, Guillermo & Leiderman, Leonardo, 1993.
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7125, University Library of Munich, Germany.
- Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1993. "Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 108-151, March.
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