Abstract
Although the Brazilian economy experienced hyperinflation from the middle of the 1980s until the beginning of the 1990s, the Real Plan stabilization policy implemented in July 1994 successfully eliminated high rates of inflation by adopting an exchange rate anchor system. It is very evident that the policy reforms introduced during the 1990s helped this disinflation process by liberalizing trade and capital markets, which significantly increased market competition and capital inflows. On the other hand, a stabilization policy based on a dollar peg inevitably led to overvaluations of real exchange rates, which in turn led to external imbalances and higher dependence on foreign capital.
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© 2007 Institute of Developing Economies (IDE), JETRO
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Nishijima, S. (2007). Monetary Policy in Brazil under a Flexible Exchange Rate. In: Mitsuo, H. (eds) New Developments of the Exchange Rate Regimes in Developing Countries. IDE-JETRO Series. Palgrave Macmillan, London. https://doi.org/10.1057/9780230625556_4
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DOI: https://doi.org/10.1057/9780230625556_4
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