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The Macroeconomic Tripod and the Workers’ Party Administration

In: The Brazilian Economy Today

Author

Listed:
  • Luiz Carlos Bresser-Pereira

Abstract

In 1999 liberal economists implemented in Brazil the “macroeconomic tripod” — primary surplus, inflation targeting, and a floating exchange rate — which they equated with responsible and competent policymaking. Yet, in the years in which the tripod was applied (1999–2010), it proved to be perverse. Inflation targeting meant a high level of interest rate, and a floating exchange rate meant an overvalued exchange rate in the long term, coupled with high current account deficits. In other words, the tripod meant exchange rate irresponsibility — the Brazilian economy continued to be trapped by high interest rates and an overvalued currency.

Suggested Citation

  • Luiz Carlos Bresser-Pereira, 2015. "The Macroeconomic Tripod and the Workers’ Party Administration," Palgrave Macmillan Books, in: Anthony W. Pereira & Lauro Mattei (ed.), The Brazilian Economy Today, chapter 6, pages 121-134, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-54981-5_6
    DOI: 10.1057/9781137549815_6
    as

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