The Macroeconomic Tripod and the Workers’ Party Administration

Luiz Carlos Bresser-Pereira ()

Chapter 6 in The Brazilian Economy Today, 2015, pp 121-134 from Palgrave Macmillan

Abstract: Abstract In 1999 liberal economists implemented in Brazil the “macroeconomic tripod” — primary surplus, inflation targeting, and a floating exchange rate — which they equated with responsible and competent policymaking. Yet, in the years in which the tripod was applied (1999–2010), it proved to be perverse. Inflation targeting meant a high level of interest rate, and a floating exchange rate meant an overvalued exchange rate in the long term, coupled with high current account deficits. In other words, the tripod meant exchange rate irresponsibility — the Brazilian economy continued to be trapped by high interest rates and an overvalued currency.

Keywords: Exchange Rate; Interest Rate; Current Account Deficit; Inflation Target; Exchange Rate Policy (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-54981-5_6

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DOI: 10.1057/9781137549815_6

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