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Canaries and Vultures: A Quantitative History of Monetary Mismanagement in Brazil

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Author Info

  • Pedro H. Albuquerque

    (Texas A&M International University)

  • Solange Gouvea

    (Central Bank of Brazil)

Abstract

During the last two decades of the twentieth century, Brazil went through a sequence of failed stabilization plans that tried to cope with an enduring hyperinflation. This paper uses a money demand model to evaluate monetary policies during those episodes. The consistency between the money supply and the expected conditional money demand growth rates is considered for each plan. It is shown that the unsuccessful programs were marked by excessive liquidity. The results not only suggest that the mismanagement of the monetary aggregates led to the failure of the plans, but also that the excessive liquidity could have been predicted.

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File URL: http://128.118.178.162/eps/dev/papers/0511/0511027.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Development and Comp Systems with number 0511027.

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Length: 34 pages
Date of creation: 23 Nov 2005
Date of revision:
Handle: RePEc:wpa:wuwpdc:0511027

Note: Type of Document - pdf; pages: 34
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Web page: http://128.118.178.162

Related research

Keywords: Money Demand; Money Supply; Monetary Policy; Inflation; Stabilization; Brazil;

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References

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  9. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
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  12. Amann, Edmund & Baer, Werner, 2003. "Anchors Away: The Cost and Benefits of Brazil's Devaluation," World Development, Elsevier, vol. 31(6), pages 1033-1046, June.
  13. Cheung, Yin-Wong & Lai, Kon S, 1993. "Finite-Sample Sizes of Johansen's Likelihood Ration Tests for Conintegration," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 55(3), pages 313-28, August.
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  16. Anindya Banerjee & Robin L. Lumsdaine & James H. Stock, 1990. "Recursive and Sequential Tests of the Unit Root and Trend Break Hypothesis: Theory and International Evidence," NBER Working Papers 3510, National Bureau of Economic Research, Inc.
  17. Osterwald-Lenum, Michael, 1992. "A Note with Quantiles of the Asymptotic Distribution of the Maximum Likelihood Cointegration Rank Test Statistics," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 461-72, August.
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  23. Pedro Albuquerque, 2006. "BAD taxation: Disintermediation and illiquidity in a bank account debits tax model," International Tax and Public Finance, Springer, vol. 13(5), pages 601-624, September.
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Cited by:
  1. Pedro H. Albuquerque, 2005. "BAD Taxation: Disintermediation and Illiquidity in a Bank Account Debits Tax Model," Public Economics 0511019, EconWPA, revised 27 Nov 2005.

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