Problems of monetary control in Brazil

Armínio Fraga Neto ()

Brazilian Journal of Political Economy, 1988, vol. 8, issue 1, 73-84

Abstract: The control of monetary aggregates in Brazil has to face three large problems: 1)high government budget deficit, 2) the ineffectiveness of the interest rate as a policy instrumentin a high inflation environment; 3) unpredictable financial innovation. The first twoproblems are especially important when one is trying to design stabilization programs. Afterinflation reaches a certain level, standard monetary policies become powerless. Control ofthe budget deficit (i.e. a limitation on the use of the inflation tax) becomes a necessary conditionfor stabilization JEL Classification: E31; E52.

Keywords: Monetary policy; inflation; stabilisation (search for similar items in EconPapers)
Date: 1988
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