On high interest rates in Brazil
By: LOPES, Francisco Lafaiete
.
Material type: 
ArticlePublisher: São Paulo : Editora 34, jan./mar. 2014Online resources: Acesso Revista de Economia Política = Brazilian Journal of Political Economy 34, 1, p. 3-14Abstract: This article examines the question of why interest rates are so high in Brazil as compared to the international average. It looks at theoretical arguments based on excessive government deficits, structural lack of private savings, inflation bias, excessive investment demand and fear of floating. An informal look at the evidence does not strongly corroborate any of these arguments. Hence a wise central bank should consider testing the market to make sure it is not dealing with an extreme equilibrium configuration or a long standing disequilibrium.
This article examines the question of why interest rates are so high in Brazil as compared to the international average. It looks at theoretical arguments based on excessive government deficits, structural lack of private savings, inflation bias, excessive investment demand and fear of floating. An informal look at the evidence does not strongly corroborate any of these arguments. Hence a wise central bank should consider testing the market to make sure it is not dealing with an extreme equilibrium configuration or a long standing disequilibrium.
Click on an image to view it in the image viewer
There are no comments for this item.