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Was there an alternative to the brazilian crisis?

Author

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  • J. A. Kregel

Abstract

In difference from Asia, high interest rates and stable exchange rates associatedwith the Real Plan did not produce a corporate debt deflation because of the low corporateindebtedness in Brazil. Instead high interest rates caused both the foreign and fiscal balancesto deteriorate, reducing confidence. Any attempt to reduce interest rates brought the threatof currency weakness and the risk of inflation. The crisis was due to the reliance on highinterest rates to attract capital flows which were insufficient to produce investment whichgave a satisfactory rate of growth. JEL Classification: F41; F65.

Suggested Citation

  • J. A. Kregel, 1999. "Was there an alternative to the brazilian crisis?," Brazilian Journal of Political Economy, Center of Political Economy, vol. 19(3), pages 426-441.
    • Handle: RePEc:ekm:repojs:v:19:y:1999:i:3:p:426-441:id:1062
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    File URL: https://centrodeeconomiapolitica.org.br/repojs/index.php/journal/article/view/1062/1047
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    Citations

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    Cited by:

    1. Philip Arestis & Fernando Ferrari-Filho & Luiz Fernando de Paula, 2011. "Inflation targeting in Brazil," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(2), pages 127-148.
    2. José Luis Oreiro & Carmem Aparecida Feijó & Lionelo Franco Punzo & João Pedro Heringer Machado, 2021. "Peripherical Financialization and Premature Deindustrialization: A Theory and the Case of Brazil (2003-2015)," Working Papers PKWP2027, Post Keynesian Economics Society (PKES).
    3. José Luis Oreiro & Carmem Aparecida Feijó & Lionelo Franco Punzo & João Pedro Heringer Machado, 2021. "Peripherical Financialization and Premature Deindustrialization: A Theory and the Case of Brazil (2003-2015)," Working Papers PKWP2103, Post Keynesian Economics Society (PKES).
    4. Philip Arestis & Luiz Fernando Paula & Fernando Ferrari-Filho, 2007. "Inflation Targeting in Emerging Countries: The Case of Brazil," Palgrave Macmillan Books, in: Philip Arestis & Alfredo Saad-Filho (ed.), Political Economy of Brazil, chapter 8, pages 116-140, Palgrave Macmillan.
    5. Antonio Carneiro de Almeida Júnior, 2023. "Currency Crisis or Overproduction? A Marxian Analysis of the Exchange Rate Peg Collapse in Brazil," Review of Radical Political Economics, Union for Radical Political Economics, vol. 55(3), pages 466-489, September.

    More about this item

    Keywords

    Financial crises; capital flows; Plano Real; globalization;
    All these keywords.

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance

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