Exchange rate regulation, the behavior of exchange rates, and macroeconomic stability in Brazil
By: SOUZA, Francisco Eduardo Pires de
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Contributor(s): CARVALHO, Fernando J. Cardim de.
Material type: 
ArticlePublisher: São Paulo : Editora 34, out./dez. 2011Subject(s): Política Econômica | Câmbio | Tributação | Regulação | Macroeconomia | BrasilOnline resources: Acesso Revista de Economia Política = Brazilian Journal of Political Economy 31, 4, p. 563-578Abstract: In the last two decades an entirely new set of rules governing the foreign exchange transactions was established in Brazil, substituting for the framework inherited from the 1930s. Foreign exchange controls were dismantled and a floating exchange rate regime replaced different forms of peg. In this paper we argue that although successful by comparison to previous experiences, the current arrangement has important flaws that should be addressed. We discuss how it first led to high volatility and extremely high interest rates, which, when overcome, gave way to a long lasting appreciation of the real exchange rate with adverse consequences to industry.
In the last two decades an entirely new set of rules governing the foreign exchange transactions was established in Brazil, substituting for the framework inherited from the 1930s. Foreign exchange controls were dismantled and a floating exchange rate regime replaced different forms of peg. In this paper we argue that although successful by comparison to previous experiences, the current arrangement has important flaws that should be addressed. We discuss how it first led to high volatility and extremely high interest rates, which, when overcome, gave way to a long lasting appreciation of the real exchange rate with adverse consequences to industry.
Outubro-dezembro/2011
v. 31, n. 4(124)
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