The role of capital flow management measures when the bubble bursts: the Brazilian experience in the global financial crisis and in the COVID-19 pandemic

Luiza Peruffo, Pedro Perfeito da Silva and André Moreira Cunha

Chapter 5 in Central Banks and Monetary Regimes in Emerging Countries, 2023, pp 82-102 from Edward Elgar Publishing

Abstract: Contrasting the performance of the Brazilian economy during the 2007-2009 Global Financial Crisis and during the ongoing COVID-19 pandemic, this chapter discusses the role of capital flows management measures (CFMs) to (i) manage the global financial cycle in developing and emerging economies (DEEs) and to (ii) create policy space for them to fight crises. It investigates the relation between the degree of financial integration and macroeconomic performance by looking at CFMs employed by Brazil before, during and after the two crises. It argues that Brazil's economic performance can be attributed both to a structural component of the international monetary and financial system (IMFS) and to Brazil's domestic policy decisions. Building on the Brazilian experience, this chapter reasons that CFMs are important not just when the bubble bursts, but rather as a perennial macroeconomic tool to reduce the negative effects of the global financial cycle to DEEs in a hierarchical IMFS.

Keywords: Development Studies; Economics and Finance (search for similar items in EconPapers)
Date: 2023
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