The Monetary and Fiscal History of Brazil, 1960-2016

Joao Ayres, Marcio Garcia, Diogo A. Guillén and Patrick Kehoe

No 25421, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Brazil has had a long period of high inflation. It peaked around 100 percent per year in 1964, decreased until the first oil shock (1973), but accelerated again afterward, reaching levels above 100 percent on average between 1980 and 1994. This last period coincided with severe balance of payments problems and economic stagnation that followed the external debt crisis in the early 1980s. We show that the high-inflation period (1960–1994) was characterized by a combination of fiscal deficits, passive monetary policy, and constraints on debt financing. The transition to the low-inflation period (1995–2016) was characterized by improvements in all of these features, but it did not lead to significant improvements in economic growth. In addition, we document a strong positive correlation between inflation rates and seigniorage revenues, although inflation rates are relatively high for modest levels of seigniorage revenues. Finally, we discuss the role of the weak institutional framework surrounding the fiscal and monetary authorities and the role of monetary passiveness and inflation indexation in accounting for the unique features of inflation dynamics in Brazil.

JEL-codes: E0 E02 E3 E4 E42 E5 E58 E6 (search for similar items in EconPapers)
Date: 2019-01
New Economics Papers: this item is included in nep-acc, nep-his, nep-lam, nep-mac and nep-mon
Note: AP EFG IFM ME
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: The Monetary and Fiscal History of Brazil, 1960-2016 (2019)
Working Paper: The Monetary and Fiscal History of Brazil, 1960-2016 (2018)
Working Paper: The monetary and fiscal history of Brazil, 1960-2016 (2018)
Working Paper: The Monetary and Fiscal History of Brazil, 1960-2016 (2018)
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