Exchange rate regulation, the behavior of exchange rates, and macroeconomic stability in Brazil

Exchange rate regulation, the behavior of exchange rates, and macroeconomic stability in Brazil

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.

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Main Authors: Souza,Francisco Eduardo Pires de, Carvalho,Fernando J. Cardim de
Format: Digital revista
Language:English
Published: Centro de Economia Política 2011
Online Access:http://old.scielo.br/scielo.php?script=sci_arttext&pid=S0101-31572011000400004
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spelling oai:scielo:S0101-315720110004000042012-02-28Exchange rate regulation, the behavior of exchange rates, and macroeconomic stability in BrazilSouza,Francisco Eduardo Pires deCarvalho,Fernando J. Cardim de Brazilian exchange rate regime capital account liberalization foreign exchange regulation 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.info:eu-repo/semantics/openAccessCentro de Economia PolíticaBrazilian Journal of Political Economy v.31 n.4 20112011-12-01info:eu-repo/semantics/articletext/htmlhttp://old.scielo.br/scielo.php?script=sci_arttext&pid=S0101-31572011000400004en10.1590/S0101-31572011000400004
institution SCIELO
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country Brasil
countrycode BR
component Revista
access En linea
databasecode rev-scielo-br
tag revista
region America del Sur
libraryname SciELO
language English
format Digital
author Souza,Francisco Eduardo Pires de
Carvalho,Fernando J. Cardim de
spellingShingle Souza,Francisco Eduardo Pires de
Carvalho,Fernando J. Cardim de
Exchange rate regulation, the behavior of exchange rates, and macroeconomic stability in Brazil
author_facet Souza,Francisco Eduardo Pires de
Carvalho,Fernando J. Cardim de
author_sort Souza,Francisco Eduardo Pires de
title Exchange rate regulation, the behavior of exchange rates, and macroeconomic stability in Brazil
title_short Exchange rate regulation, the behavior of exchange rates, and macroeconomic stability in Brazil
title_full Exchange rate regulation, the behavior of exchange rates, and macroeconomic stability in Brazil
title_fullStr Exchange rate regulation, the behavior of exchange rates, and macroeconomic stability in Brazil
title_full_unstemmed Exchange rate regulation, the behavior of exchange rates, and macroeconomic stability in Brazil
title_sort exchange rate regulation, the behavior of exchange rates, and macroeconomic stability in brazil
description 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.
publisher Centro de Economia Política
publishDate 2011
url http://old.scielo.br/scielo.php?script=sci_arttext&pid=S0101-31572011000400004
work_keys_str_mv AT souzafranciscoeduardopiresde exchangerateregulationthebehaviorofexchangeratesandmacroeconomicstabilityinbrazil
AT carvalhofernandojcardimde exchangerateregulationthebehaviorofexchangeratesandmacroeconomicstabilityinbrazil
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