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

Abstract

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.

Capital Account Regulation and National Autonomy: The Political Economy of the New Welfare Economics

“…In light of these developments, China's capital controls policies served as part of a set of policies that allowed it to break with this vicious circle and ultimately increase its national autonomy. This assumption is in line with the arguments in favour of capital controls put forward by authors such as Fritz and Prates 2018;Gallagher 2015;Grabel 2017;Kregel 2004;Ocampo 2017;Prates and Paula 2018;Souza and Carvalho 2011. Taken together, China's and Brazil's distributions and compositions of foreign assets can be linked with the issue of national autonomy. For China, the preponderance of foreign assets implies a higher degree of national autonomy and, increasingly, a projection of its monetary and financial power abroad (Cohen 2018).…”

“…The 1990s were a turning point for Brazil's engagement with the globalization order and its neoliberal policy prescriptions (Goldfajn and Minella 2007: 370;Souza and Carvalho 2011). Following an initial opening in the late-1980s, when Brazil started to liberalize capital inflows, in the 1990s, the government committed with capital account openness, liberalizing capital outflows, removing restrictions over FDI, and allowing foreign institutional investors to acquire derivatives and domestic firms' equities (Goldfajn and Minella 2007: 372).…”

“…Brazilian authorities seized the prosperous period to build up international reserves and to reduce the dollar-denominated debt, including by paying off Brazil's debt with the IMF two years ahead of schedule. While dealing with the traditional constraints of foreign currency shortages and of high levels of public indebtedness in foreign currency, Brazilian governments lowered controls for foreign participants to operate in Brazil (Prates and Paula 2017;Souza and Carvalho 2011). Gradually, foreign participants accounted for a large share of domestic assets, rendering Brazil's external vulnerability increasingly denominated in domestic currency.…”

A inserção da América Latina no sistema centro-periferia, no contexto de finanças globalizadas : obervações para México, Brasil e Argentina

“…No final da década de 1980 e início da seguinte, houve uma retomada do processo de liberalização financeira pela economia brasileira, com a adoção de três medidas radicais favoráveis à livre conversibilidade da conta de capitais: (i) a criação de um segmento do mercado cambial caracterizado pela livre flutuação; (ii) a abertura de mercados de ativos financeiros para a participação de investidores estrangeiros; e (iii) a facilitação para a saída de capital da economia doméstica, por meio de mudanças na conta CC5 86 , que permitiram que as instituições financeiras que operavam no mercado doméstico alocassem para o exterior tanto seus próprios recursos quanto os depósitos em geral, sem necessidade de demonstrar que eles haviam sido previamente aplicados no Brasil (Souza e Carvalho, 2011).…”

“…2005; Souza e Carvalho, 2011;Souza, 1999) e pelo início do processo de privatização de empresas estatais.…”