Notes on the brazilian crisis of 1997-99

Vol. 23 No. 3 (2003)

Jul-Sep / 2003
Published July 1, 2003

How to Cite

Lopes, Francisco L. 2003. “Notes on the Brazilian Crisis of 1997-99”. Brazilian Journal of Political Economy 23 (3):376-404.

Notes on the brazilian crisis of 1997-99

Francisco L. Lopes
Macrométrica Sistemas Ltda., Rio de Janeiro/RJ, Brasil.
Brazilian Journal of Political Economy, Vol. 23 No. 3 (2003), Jul-Sep / 2003, Pages 376-404


This paper deals with the Brazilian crisis of 1997-98 that lead to the exchange rate floating of January 1999. It starts by showing how exchange rate policy evolved since the Real Plan of 1994 and how the exchange rate regime became a critical issue when the crisis started in 1997. It discusses monetary policy during the crisis, the IMF program, the endogenous diagonal band and the decision to float as an alternative to capital controls and default. This five-year drama ended surprisingly well with a benign float, but it is useful to know its details, with the usual mix of economic de- bate, personality clashes and historical fatality.

JEL Classification: N16; F0; E4.

Keywords: Brazilian crisis of 1997-98 exchange rate policy Real Plan of 1994 endogenous diagonal band decision to float