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The Interest Rate During the Lula Government: A Research Agenda

Carlos Vidotto and João Sicsú
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Carlos Vidotto: Universidade Federal Fluminense
João Sicsú: Universidade Federal do Rio de Janeiro

Chapter 11 in Political Economy of Brazil, 2007, pp 180-193 from Palgrave Macmillan

Abstract: Abstract Brazilian interest rates have been consistently high, despite their downward trend in 2006. The real interest rate has rarely been below ten per cent for several years, which seems to be its floor level. Several explanations have been offered for this phenomenon, with important implications to the economy. High interest rates are allegedly used to tame inflation and/or regulate the exchange rate. However, one might argue that high interest rates induce a permanent fiscal imbalance, because of the heavy burden of the domestic public debt, and do not allow the rate of unemployment to fall, due to the restrictions imposed on demand.

Keywords: Exchange Rate; Interest Rate; Monetary Policy; Fiscal Policy; Public Debt (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1057/9780230390102_11

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