Policy Space in a Financially Integrated World: The Brazilian Case in the 2000s

  • Carmem Feijo Fluminense Federal University, Brazil
  • Marcos Tostes Lamonica Fluminense Federal University, Brazil

Abstract

This paper makes the argument that policy space in Brazil has been narrowing since the trade and capital opening made in the 1990s. This is so because the opening of the Brazilian economy has implied that real and nominal interest rates have been kept high and the real exchange rate has shown a trend towards appreciation. The behavior of the main macroeconomic prices of the Brazilian economy brought, as a minimum, two negative results to economic growth. On one hand, the annual average growth rate was reduced because structural change had been moving towards less technologically productive sectors, which deepened deindustrialization. On the other hand, short-term economic growth had become more volatile, given that the evolution of the investment position of the country increased its potential degree of external fragility.


Key words: Policy space, Brazilian economy, Balance of payment dominance.
JEL: O11, O14.

How to Cite
Feijo C., & Tostes Lamonica M. (2018). Policy Space in a Financially Integrated World: The Brazilian Case in the 2000s. Panoeconomicus, Advance online publication. doi:10.2298/PAN160502002F
Section
Original scientific paper