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Problems of monetary control in Brazil

Author

Listed:
  • Armínio Fraga Neto

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 instrumentin a high inflation environment; 3) unpredictable financial innovation. The first twoproblems are especially important when one is trying to design stabilization programs. Afterinflation reaches a certain level, standard monetary policies become powerless. Control ofthe budget deficit (i.e. a limitation on the use of the inflation tax) becomes a necessary conditionfor stabilization JEL Classification: E31; E52.

Suggested Citation

  • Armínio Fraga Neto, 1988. "Problems of monetary control in Brazil," Brazilian Journal of Political Economy, Center of Political Economy, vol. 8(1), pages 73-84.
    • Handle: RePEc:ekm:repojs:v:8:y:1988:i:1:p:73-84:id:1084
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    File URL: https://centrodeeconomiapolitica.org.br/repojs/index.php/journal/article/view/1084/1069
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    More about this item

    Keywords

    Monetary policy; inflation; stabilisation;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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