Currency Stabilisation under Conditions of International Capital Mobility: The Case of Brazil
This 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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- 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.
- Carmem Aparecida Feijo & Fernando J. Cardim De Carvalho, 1992. "The Resilience of High Inflation: Recent Brazilian Failures with Stabilization Policies," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 15(1), pages 109-124, October.
- 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.
- Batista Junior, Paulo Nogueira, 1996. "Plano Real: estabilização monetária e desequilíbrio externo," Textos para discussão 50, Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
- Kane, Cheikh & Morisett, Jacques, 1993. "Who would vote for inflation in Brazil? : an integrated framework approach to inflation and income distribution," Policy Research Working Paper Series 1183, The World Bank.
- Bacha, Edmar, 1997. "Plano Real: uma segunda avaliação," Coediciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1541, March.
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