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

  • Pedro H. Albuquerque

    (Texas A&M International University)

  • Solange Gouvea

    (Central Bank of Brazil)

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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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
Contact details of provider: Web page: http://128.118.178.162

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  18. Eliana A. Cardoso & Rudiger Dornbusch, 1987. "Brazil's Tropical Plan," NBER Working Papers 2142, National Bureau of Economic Research, Inc.
  19. 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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