Was there an alternative to the brazilian crisis?

Jan Kregel

Brazilian Journal of Political Economy, 1999, vol. 19, issue 3, 426-441

Abstract: In difference from Asia, high interest rates and stable exchange rates associatedwith the Real Plan did not produce a corporate debt deflation because of the low corporateindebtedness in Brazil. Instead high interest rates caused both the foreign and fiscal balancesto deteriorate, reducing confidence. Any attempt to reduce interest rates brought the threatof currency weakness and the risk of inflation. The crisis was due to the reliance on highinterest rates to attract capital flows which were insufficient to produce investment whichgave a satisfactory rate of growth. JEL Classification: F41; F65.

Keywords: Financial crises; capital flows; Plano Real; globalization (search for similar items in EconPapers)
Date: 1999
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