Capital account regulation in Brazil: an assessment of the 2009-2013 period

Vol. 37 No. 1 (2017)

Jan-Mar / 2017
Published February 26, 2020
PDF-English
PDF-English

How to Cite

Magalhães Prates, Daniela, and Luiz Fernando de Paula. 2017. “Capital Account Regulation in Brazil: An Assessment of the 2009-2013 Period”. Brazilian Journal of Political Economy 37 (1):108-29. https://doi.org/10.1590/0101-31572016v37n01a06.

Capital account regulation in Brazil: an assessment of the 2009-2013 period

Daniela Magalhães Prates
Professor of Economics da Universidade Estadual de Campinas (UNICAMP) and CNPq researcher.
Luiz Fernando de Paula
Professor of Economics da Universidade do Estado do Rio de Janeiro (UER J) and CNPq researcher.
Brazilian Journal of Political Economy, Vol. 37 No. 1 (2017), Jan-Mar / 2017, Pages 108-129

Abstract

Brazil was one of the emerging countries that had a stronger trend of currency appreciation from the 2nd quarter of 2009 to July 2011. Under this context that can be understood the implementation of capital account regulation (CAR) after 2009, which was complemented with another kind of regulation, the so-called FX Derivatives Regulation (FXDR). This paper shows that only when Brazilian government adopted these two kinds of regulations simultaneously, the policy effectiveness increased in terms of protecting the Brazilian currency from upward pressures. Brazilian experience also highlights that it is not possible to establish a hierarchy between temporary instruments to manage capital flows and permanent prudential measures, as supported by the IMF current approach.

JEL Classification: F31; F32; F53,


Keywords: Capital account liberalization capital controls Brazilian economy