Brazil’s Enormous Interest Rate Tax: Can Brazilians Afford It?

Mark Weisbrot, Jake Johnston () and Julia Villarruel Carrillo

CEPR Reports and Issue Briefs from Center for Economic and Policy Research (CEPR)

Abstract: This paper looks at Brazil’s unusually high interest rates. Brazil has the fourth-highest interest burden in the world on its federal debt (out of a total of 183 countries). The paper finds that this is not a result of known risk factors, but rather is due to unusually high interest rates set by the Central Bank — Brazil’s policy interest rates have also been among the highest in the world — and to the market and political power of a highly concentrated banking sector. The authors warn that unless Brazil corrects its monetary policy, it could contribute to another severe, long-term growth failure comparable to the experience of 1980–2003. During that time, per capita GDP growth averaged about 0.2 percent per year.

JEL-codes: E E4 E42 E43 E5 E52 E58 F H H6 H63 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2016-12
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:epo:papers:2016-22

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