Banks, domestic debt intermediation and confidence crises: the recent Brazilian experience
This paper examines the recent evolution of the Brazilian public domestic debt and interprets it in light of the confidence crisis literature. The analysis of the recent developments in the Brazilian public domestic debt market shows that the likelihood of a default must not be assessed only using simple summary aggregate measures of public domestic debt size and maturity, but must also take into consideration other structural aspects. Our analysis emphasizes the two main pillars of the Brazilian public domestic debt market: home-bias and the role of the banking sector in intermediating the debt. Evidence from yields of a perfectly indexed bond shows that the rollover premium was very small when the devaluation occurred, and is still fairly small by October, 1999, indicating that the rollover of the public domestic debt has not, so far, constituted a serious problem. Positive prospects for the public domestic debt market will depend, however, on the Brazilian government maintaining the current fiscal austerity program.
|Date of creation:||Nov 1999|
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- Garcia, Marcio G. P., 1996.
"Avoiding some costs of inflation and crawling toward hyperinflation: The case of the Brazilian domestic currency substitute,"
Journal of Development Economics,
Elsevier, vol. 51(1), pages 139-159, October.
- Marcio Goes Pinto Garcia, 1994. "Avoiding some costs of inflation and crawling toward hyperinflation: the case of the Brazilian domestic currency substitute," Textos para discussão 326, Department of Economics PUC-Rio (Brazil).
- Calvo, Guillermo A. & Mendoza, Enrique G., 1996. "Mexico's balance-of-payments crisis: a chronicle of a death foretold," Journal of International Economics, Elsevier, vol. 41(3-4), pages 235-264, November.
- Guillermo A. Calvo & Enrique G. Mendoza, 1996. "Mexico's balance-of-payments crisis: a chronicle of death foretold," International Finance Discussion Papers 545, Board of Governors of the Federal Reserve System (U.S.).
- Cysne, Rubens Penha, 1993. "Imposto inflacionário e transferências inflacionárias no Brasil," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 219, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil). Full references (including those not matched with items on IDEAS)
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