The Real Plan: Stabilization and destabilization

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Data

2000-01-01

Autores

Cinquetti, Carlos A. [UNESP]

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Resumo

The paper analyzes Brazil's Real Plan, an exchange-rate based stabilization program, implemented in 1994, which mixed a spectacular price stabilization with some serious macroeconomic destabilization. The paper focuses on two of these imbalances: the consumption boom and the financial destabilization; showing that the former represented nothing the reverse side of a collapsed investment boom, which, in turn, led to the financial (banking) crisis. We hold that these instabilities were produced by a policy arrangement in which monetary and fiscal policies alone had to compensate for a largely appreciated, almost fixed, exchange rate anchor. (C) 2000 Elsevier Science Ltd. All rights reserved.

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Brazil, Consumption boom, Exchange rate anchor, Inflation, Real Plan, Stabilization program, exchange rate, fiscal policy, monetary policy, pricing policy, stabilization

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World Development, v. 28, n. 1, p. 155-171, 2000.

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