Problems of monetary control in Brazil

Vol. 8 No. 1 (1988)

Jan-Mar / 1988
Published January 1, 1988
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Neto, Armínio Fraga. 1998. “Problems of Monetary Control in Brazil”. Brazilian Journal of Political Economy 8 (1):73-84. https://doi.org/10.1590/0101-31571988-0071.

Problems of monetary control in Brazil

Armínio Fraga Neto
Fundação Getúlio Vargas do Rio de Janeiro – FGV /RJ.
Brazilian Journal of Political Economy, Vol. 8 No. 1 (1988), Jan-Mar / 1988, Pages 73-84

Abstract

The control of monetary aggregates in Brazil has to face three large problems: 1)
high government budget deficit, 2) the ineffectiveness of the interest rate as a policy instrument
in a high inflation environment; 3) unpredictable financial innovation. The first two
problems are especially important when one is trying to design stabilization programs. After
inflation reaches a certain level, standard monetary policies become powerless. Control of
the budget deficit (i.e. a limitation on the use of the inflation tax) becomes a necessary condition
for stabilization

JEL Classification: E31; E52.


Keywords: Monetary policy inflation stabilisation