The document discusses the history and implementation of the Brazilian Real currency, which was introduced in 1994 to stabilize Brazil's economy and hyperinflation. It describes the three stages of the "Real Plan" stabilization plan, which included gaining congressional support, introducing a new currency index called the URV, and finally launching the Real to replace the Cruzeiro. The Real was initially pegged to the US dollar and was very effective at reducing inflation. The document also examines Brazil's monetary and fiscal policies and how its central bank uses interest rates to target inflation while the government implements social programs that impact fiscal policy and domestic income and prices.
La cultura española se caracteriza por su diversidad regional. Las lenguas principales son el español y el catalán, y cada región tiene sus propias tradiciones musicales y de danza como la sardana catalana y el flamenco andaluz. La gastronomía española refleja las influencias árabes y judías en platos como la paella, el gazpacho y el pan con tomate. Algunas de las celebraciones más importantes son el Día de la Hispanidad, la Navidad y eventos regionales como La Tomatina.
Saúl fue el primer rey de Israel, ungió por el profeta Samuel para liberar al pueblo de los invasores filisteos. Al principio tuvo éxito derrotando a varios enemigos, pero luego se volvió celoso de David y sus triunfos militares, intentando matarlo. Finalmente Saúl y su hijo Jonatán murieron en batalla contra los filisteos, marcando el fin de la casa real de Saúl.
Este documento proporciona información sobre el Registro Único de Contribuyentes (RUC) en Perú. El RUC es un registro de la SUNAT que contiene datos de identificación de los contribuyentes a nivel nacional. Entre otros temas, explica cómo obtener el RUC, quiénes deben inscribirse, cómo realizar modificaciones en el RUC y la importancia de mantener actualizada la información del RUC.
Resumen del libro del profeta Daniel capitulos 1 - 6 la seccion historica para clase de profetas mayores de agape instituto biblico. profesor Frank Catano
Contabilizacion del impuesto sobre las ventas por pagarjhonnyvides
El documento describe el tratamiento contable del IVA generado y descontable para compradores y vendedores. Para los compradores, el IVA descontable se debita en la cuenta "Impuesto sobre las ventas por pagar (IVA)" mientras que para los vendedores, el IVA generado se acredita en la misma cuenta. Cuando el IVA no está discriminado en la factura, el comprador no puede descontarlo y debe registrarlo como mayor costo.
Este documento contiene tres facturas emitidas por La Selecta S.A. de C.V. a clientes. Cada factura incluye detalles de ventas gravadas, no sujetas e isentas, así como el IVA y total adeudado. La empresa se dedica a la compra y venta de electrodomésticos y opera en la colonia La Rabida en San Salvador.
Brazil has the 5th largest area and population in the world, and the 10th largest economy. Agriculture, mining, and manufacturing industries have led Brazil's economy, and it is the largest exporter of coffee, sugar, cattle, and orange juice. The value of the Brazilian Real has fluctuated over time depending on economic and political conditions both domestically and globally. Looking to the future, further growth in key exports, commodity prices, foreign investment, and recent oil discoveries suggest the Real will continue to appreciate against the U.S. dollar, though the government may intervene to support export competitiveness.
La cultura española se caracteriza por su diversidad regional. Las lenguas principales son el español y el catalán, y cada región tiene sus propias tradiciones musicales y de danza como la sardana catalana y el flamenco andaluz. La gastronomía española refleja las influencias árabes y judías en platos como la paella, el gazpacho y el pan con tomate. Algunas de las celebraciones más importantes son el Día de la Hispanidad, la Navidad y eventos regionales como La Tomatina.
Saúl fue el primer rey de Israel, ungió por el profeta Samuel para liberar al pueblo de los invasores filisteos. Al principio tuvo éxito derrotando a varios enemigos, pero luego se volvió celoso de David y sus triunfos militares, intentando matarlo. Finalmente Saúl y su hijo Jonatán murieron en batalla contra los filisteos, marcando el fin de la casa real de Saúl.
Este documento proporciona información sobre el Registro Único de Contribuyentes (RUC) en Perú. El RUC es un registro de la SUNAT que contiene datos de identificación de los contribuyentes a nivel nacional. Entre otros temas, explica cómo obtener el RUC, quiénes deben inscribirse, cómo realizar modificaciones en el RUC y la importancia de mantener actualizada la información del RUC.
Resumen del libro del profeta Daniel capitulos 1 - 6 la seccion historica para clase de profetas mayores de agape instituto biblico. profesor Frank Catano
Contabilizacion del impuesto sobre las ventas por pagarjhonnyvides
El documento describe el tratamiento contable del IVA generado y descontable para compradores y vendedores. Para los compradores, el IVA descontable se debita en la cuenta "Impuesto sobre las ventas por pagar (IVA)" mientras que para los vendedores, el IVA generado se acredita en la misma cuenta. Cuando el IVA no está discriminado en la factura, el comprador no puede descontarlo y debe registrarlo como mayor costo.
Este documento contiene tres facturas emitidas por La Selecta S.A. de C.V. a clientes. Cada factura incluye detalles de ventas gravadas, no sujetas e isentas, así como el IVA y total adeudado. La empresa se dedica a la compra y venta de electrodomésticos y opera en la colonia La Rabida en San Salvador.
Brazil has the 5th largest area and population in the world, and the 10th largest economy. Agriculture, mining, and manufacturing industries have led Brazil's economy, and it is the largest exporter of coffee, sugar, cattle, and orange juice. The value of the Brazilian Real has fluctuated over time depending on economic and political conditions both domestically and globally. Looking to the future, further growth in key exports, commodity prices, foreign investment, and recent oil discoveries suggest the Real will continue to appreciate against the U.S. dollar, though the government may intervene to support export competitiveness.
This document provides an overview of Brazil's geography, demographics, natural resources, and energy sources. Some key points:
- Brazil has a large land area and population of around 188 million people, though population density varies significantly across regions.
- The country has abundant natural resources like iron ore, manganese, bauxite, and gemstones. Offshore oil discoveries have made Brazil energy independent.
- Hydroelectric power is a major energy source, utilizing around 55% of Brazil's large hydroelectric potential as of 2003.
The document discusses the random walk theory, which states that stock price movements cannot be predicted because they follow a random path rather than any predictable patterns. It originated in the 1900s and was popularized in a 1973 book. The random walk theory says past stock performance does not indicate future performance and prices reflect all available information. However, some studies have found evidence of predictability based on factors like earnings. The implications are that market timing is difficult and outperforming the market through analysis alone may involve some luck.
The document summarizes the development of Brazil's economy from 1500 to the present. It describes how Brazil was initially colonized by Portugal and its economy was based on exports of sugar and cattle. In the 1700s, precious metals were discovered. In the 1800s, coffee became a major export and Brazil gained independence in 1822. The structure of the economy shifted over time from being based on exports of commodities like coffee, rubber, and cotton to import substitution industrialization starting in the 1930s. More recently, Brazil has become one of the largest economies in the world, with steady GDP growth, reductions in inequality, and the discovery of major oil reserves transforming its economic outlook.
Brazil is a country with a diverse population and culture influenced by its Portuguese colonizers. It gained independence in 1822 and has significant agricultural, mining, and livestock industries. The dominant religion is Roman Catholic and popular foods include feijoada and brigadeiro. Brazil contains the largest rainforest in the world, the Amazon jungle, and is known for soccer and its exuberant Carnival celebrations.
Brazil has a population of over 201 million people and its official language is Portuguese. It has diverse wildlife including over 3000 freshwater fish and is home to the largest rainforest in the world, the Amazon Rainforest, which contains 10% of the planet's known species and is inhabited by indigenous tribes.
Brazil has the largest economy in Latin America and the 7th largest in the world. While it has experienced strong growth of around 7.5% in recent years, inflation has also risen above 5% due to factors like growth, a overvalued currency, and capital inflows. To address inflation, Brazil has tried raising interest rates and implementing spending cuts of 50 billion reals, though some critics argue bigger spending cuts and other measures are needed to overhaul public finances and control inflation while still promoting growth.
Brazil has one of the largest and fastest growing economies in the world, and is predicted to become one of the top five economies globally in the coming decades. It has a large industrial sector producing automobiles, steel, and aircraft. Agriculture is also important, with Brazil being a top global producer of grains and soybeans. Historically, Brazil's economy relied on exports of gold, coffee, sugar, and raw materials, and used slave labor until the 19th century. It has since diversified and now has hundreds of trade partners.
The economy of Brazil has grown steadily in recent years with a GDP of $3.143 trillion and real GDP growth of 3.7% annually. Some key economic indicators include an inflation rate of 3% and an unemployment rate of 9.6%. Brazil has a large agriculture sector producing coffee, soybeans and sugarcane, and industrial sectors like textiles, chemicals, aircraft and motor vehicles. While Brazil has experienced growth, challenges remain around fiscal strategy, infrastructure investment, and taxation policy to support higher long-term economic productivity.
The document discusses tests performed to analyze random walk theory (RWT). RWT states that future stock prices cannot be predicted from past prices. Simulation tests, conducted by Harry Roberts, generated random stock price graphs to examine RWT. Serial correlation tests, performed by Moore in 1964, analyzed correlations between weekly stock price changes. Filter tests established buy and sell points at certain percentage thresholds above or below original prices. Run tests counted consecutive price increases or decreases to assess randomness.
This document provides information about Group 6B's project on analyzing the macroeconomic policies of Brazil. It outlines the key aspects they will focus on, referred to as CCCF - Capital Flows, Competitive Advantage, Communication, and Fiscal Policy. The document then provides details on each of these topics as they relate to Brazil, including sections on the country's history with capital flows, competitive advantages according to Porter's Diamond model, developments in communication and IT, and an overview of Brazil's fiscal policies and tax system.
December 2010 - Domestic Market: Set to soarFGV Brazil
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
Brazil towards economic depression and the political and social changeFernando Alcoforado
Brazil is experiencing stagflation, characterized by low economic growth and high inflation. The government has tried stimulating consumption through tax cuts, but this has not increased investment. Inflation remains above targets due to rising production costs. If current economic policies continue, restricting growth and failing to reduce inflation, Brazil risks entering an economic depression with mass unemployment, business failures, and declining production and investment levels. Social unrest may also increase as purchasing power falls and inflation fuels expansion of social movements.
With Michel Temer's government conquering their first victories in congress, how will Brazil's Economy line up for the following months? This question is answered in this month's Focus Economics Report issued by the Economics Team of the UK Mission in Brazil.
This article aims to present the strategies that would make it possible to eliminate inflation in Brazil. Inflation is defined as the continuous, persistent and widespread increase in prices in general. Inflation mainly affects the less favored sections of the population, as they have less access to financial instruments to defend themselves from rising prices. Inflation is presented as one of the scourges that affect the Brazilian population at the present time because it erodes the income of all Brazilians, but it is crueler to those who have less income. The control of inflation by the Brazilian government has been extremely ineffective. Controlling the inflation of demand for goods and services would be effective if the Brazilian government planned the economy together with the productive sector so that national production meets domestic demand for goods and services. Controlling the cost inflation would be effective if the Brazilian government monitor the evolution of wages, raw materials and input prices to adopt measures to avoid their increase, encourage increased productivity in agricultural, industrial, trade and services production and promote cost reduction in inefficient electric energy and oil production systems with their planning and nationalization and in cargo transport with their planning oriented towards waterway and rail modes. The current strategy to combat demand inflation is ineffective because the government increases the basic interest rate (Selic rate) and reduces the amount of currency in circulation in the economy through the sale of government bonds that contribute to worsening the recession in the country and increase public debt. The current strategy to fight cost inflation is ineffective because the government does not work with the productive sectors to promote productivity increases in agricultural, industrial, commercial and service production. To put an end to the scourge of inflation in Brazil, it is necessary to ensure that the neoliberal economic model that has presided over the actions of the Brazilian government in the economy since 1990 is immediately abandoned and replaced by the Keynesian-based national developmentalist model that would make the government play an active role in the planning of the national economy which, with feedback and control mechanisms, would successfully combat demand and cost inflation, avoid hyperinflation and promote national development.
Brazil faced a currency crisis in 1998-1999 as investors lost faith in the government's ability to maintain the real's fixed exchange rate against the dollar. High inflation and government spending deficits weakened Brazil's economy. When Russia defaulted on its debt in 1998, investors withdrew funds from Brazil, depleting reserves. In January 1999, Brazil devalued the real by 8% initially and it fell 66% by the end of the month. The devaluation improved Brazil's current account and increased GDP as exports became cheaper. However, it also increased the country's dollar-denominated debt. Brazil could have avoided crisis by instituting a managed depreciation earlier through a pegged basket of currencies or public recognition of overvaluation.
Controlling the financial system to prevent economic debacle in brazilFernando Alcoforado
Anyone who understand economics knows that in the economic stagnation that affect Brazil at the time, economic growth is only achieved since the government raise its spending to offset the fall in consumption and investment. Who formulated this teaching was the great economist John Maynard Keynes in the mid-twentieth century. The argument put forward by the government that first need to reduce government spending and then to promote economic growth is totally irrational from the Keynesian perspective. In addition, the Michel Temer government is blackmailing with the population to say that the alternative is cutting government spending or tax increases. It is an unfortunate fact the Michel Temer government want to solve the economic crisis in Brazil that worsens every day with the adoption of fiscal adjustment that reduces public spending and tends to deepen the process of economic stagnation in the country.
- Agricultural employment share is negatively correlated with income inequality, as workers transition to higher-paying industrial and service jobs. Service sector employment share also has a negative correlation, as this labor-intensive sector tends to equalize wages.
- GDP growth volatility is positively correlated with inequality, as unstable economic conditions impact low-income groups more. Trade liberalization is negatively correlated, as it raises wages for abundant unskilled labor in Brazil.
- Industrial value-added is negatively correlated, as higher productivity in this sector tends to increase wages and reduce inequality over time.
Poverty, Inequality and Social Policies in Brazil: 1995-2009 UNDP Policy Centre
Since the mid-1990s, Brazil has undergone extensive reforms that have finally reversed the dismaying economic performance of the 1980s. In particular, poverty and inequality indicators have improved dramatically, especially since the late-2000s. This new paper published by the International Policy Centre for Inclusive Growth (IPC-IG) provides an overview of such recent trends and discusses the role played by four major government interventions: public education, the minimum wage law, Social Security pensions and Social Assistance transfers. Additionally, available data sets and methods for policy evaluation are also discussed. Check out more IPC-IG papers on social protection in the developing and emerging countries here: http://www.ipc-undp.org/CctNew.do?language=1&active=3
The Brazilian economy grew by 4.2 percent annually from 2004-2010, more than double its annual growth from 1999-2003 or indeed its growth rate over the prior quarter century. This growth was accompanied by a significant reduction in poverty and extreme poverty, especially after 2005, as well as reduced inequality. This paper looks at the combination of external changes and changes in macroeconomic policy that contributed to these results.
The overall policy framework since 1999 has consisted of a “tripod” of explicit inflation targets, a (very “dirty”) floating exchange rate regime, and specific (and quite large) targets for the primary budget surplus. The Brazilian inflation-targeting system requires that the monetary authority pursue a single objective, the control of inflation, which must remain inside a pre-defined range within a calendar year. Although the inflation target was not achieved in the years 2001 to 2003, since 2004 the government was successful in keeping inflation within the target range every single year, even in the turbulent year of 2008.
This paper shows that the Central Bank was able to meet its inflation target after 2004 through a continual appreciation of the exchange rate. It is argued by the Brazilian monetary authorities, and commonly believed in media and policy circles, that inflation is driven by changes in aggregate demand. The commonly accepted story is that when the Central Bank raises policy interest rates, it causes a reduction in aggregate demand and therefore lowers inflation. However, as the authors demonstrate, inflation in Brazil is driven by cost-push pressures and not by changes in aggregate demand; and so it is the reduction in import and export prices, due to appreciation of the Brazilian Real, that has allowed Brazil to maintain its inflation target during these years. When the Central Bank raises policy rates, this attracts capital inflows, thus appreciating the currency and reducing inflation by reducing import and export prices. Therefore, the Brazilian inflation-targeting system, in which the interest rate is used to control inflation, actually works directly through the exchange-rate cost channel.
There was more policy space for Brazil after 2003 because of more favorable external conditions. The improved current account, and the resumption of large capital inflows allowed the government to quickly repay in full – and get rid of – IMF loans and conditionalities in late 2005, reduce the overall external debt, and accumulate a massive amount of reserves. The ratio of short-term external debt to foreign exchange reserves, which had reached more than 90% on the eve of the 1999 exchange-rate crisis, fell to about 20% by 2008.
Brazil’s expansion was initially led by a boom in exports and GDP growth was not very fast; but from 2006 on, export growth lost steam and the internal market began to grow faster, thanks to a more expansionary macroeconomic policy. This was especia
This document summarizes a paper about macroeconomic policy, growth, and income distribution in Brazil during the 2000s. The paper analyzes how changes in external conditions and domestic policy contributed to improved economic performance after 2005. It discusses Brazil's inflation targeting system and how the central bank was able to meet inflation targets through exchange rate appreciation. While higher interest rates were meant to reduce demand and inflation, inflation was actually driven by cost factors and import/export prices. The paper examines Brazil's economic growth, reduction in poverty and inequality, challenges around external competitiveness, and proposes some policy alternatives.
January 2016 - Labor market at breaking pointFGV Brazil
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
How brazil must face global recession and internal economic stagnationFernando Alcoforado
This article aims to present the impacts that the ongoing global recession will have on the Brazilian economy and the solutions to deal with this gigantic problem and the internal economic stagnation.
This document provides an overview of Brazil's geography, demographics, natural resources, and energy sources. Some key points:
- Brazil has a large land area and population of around 188 million people, though population density varies significantly across regions.
- The country has abundant natural resources like iron ore, manganese, bauxite, and gemstones. Offshore oil discoveries have made Brazil energy independent.
- Hydroelectric power is a major energy source, utilizing around 55% of Brazil's large hydroelectric potential as of 2003.
The document discusses the random walk theory, which states that stock price movements cannot be predicted because they follow a random path rather than any predictable patterns. It originated in the 1900s and was popularized in a 1973 book. The random walk theory says past stock performance does not indicate future performance and prices reflect all available information. However, some studies have found evidence of predictability based on factors like earnings. The implications are that market timing is difficult and outperforming the market through analysis alone may involve some luck.
The document summarizes the development of Brazil's economy from 1500 to the present. It describes how Brazil was initially colonized by Portugal and its economy was based on exports of sugar and cattle. In the 1700s, precious metals were discovered. In the 1800s, coffee became a major export and Brazil gained independence in 1822. The structure of the economy shifted over time from being based on exports of commodities like coffee, rubber, and cotton to import substitution industrialization starting in the 1930s. More recently, Brazil has become one of the largest economies in the world, with steady GDP growth, reductions in inequality, and the discovery of major oil reserves transforming its economic outlook.
Brazil is a country with a diverse population and culture influenced by its Portuguese colonizers. It gained independence in 1822 and has significant agricultural, mining, and livestock industries. The dominant religion is Roman Catholic and popular foods include feijoada and brigadeiro. Brazil contains the largest rainforest in the world, the Amazon jungle, and is known for soccer and its exuberant Carnival celebrations.
Brazil has a population of over 201 million people and its official language is Portuguese. It has diverse wildlife including over 3000 freshwater fish and is home to the largest rainforest in the world, the Amazon Rainforest, which contains 10% of the planet's known species and is inhabited by indigenous tribes.
Brazil has the largest economy in Latin America and the 7th largest in the world. While it has experienced strong growth of around 7.5% in recent years, inflation has also risen above 5% due to factors like growth, a overvalued currency, and capital inflows. To address inflation, Brazil has tried raising interest rates and implementing spending cuts of 50 billion reals, though some critics argue bigger spending cuts and other measures are needed to overhaul public finances and control inflation while still promoting growth.
Brazil has one of the largest and fastest growing economies in the world, and is predicted to become one of the top five economies globally in the coming decades. It has a large industrial sector producing automobiles, steel, and aircraft. Agriculture is also important, with Brazil being a top global producer of grains and soybeans. Historically, Brazil's economy relied on exports of gold, coffee, sugar, and raw materials, and used slave labor until the 19th century. It has since diversified and now has hundreds of trade partners.
The economy of Brazil has grown steadily in recent years with a GDP of $3.143 trillion and real GDP growth of 3.7% annually. Some key economic indicators include an inflation rate of 3% and an unemployment rate of 9.6%. Brazil has a large agriculture sector producing coffee, soybeans and sugarcane, and industrial sectors like textiles, chemicals, aircraft and motor vehicles. While Brazil has experienced growth, challenges remain around fiscal strategy, infrastructure investment, and taxation policy to support higher long-term economic productivity.
The document discusses tests performed to analyze random walk theory (RWT). RWT states that future stock prices cannot be predicted from past prices. Simulation tests, conducted by Harry Roberts, generated random stock price graphs to examine RWT. Serial correlation tests, performed by Moore in 1964, analyzed correlations between weekly stock price changes. Filter tests established buy and sell points at certain percentage thresholds above or below original prices. Run tests counted consecutive price increases or decreases to assess randomness.
This document provides information about Group 6B's project on analyzing the macroeconomic policies of Brazil. It outlines the key aspects they will focus on, referred to as CCCF - Capital Flows, Competitive Advantage, Communication, and Fiscal Policy. The document then provides details on each of these topics as they relate to Brazil, including sections on the country's history with capital flows, competitive advantages according to Porter's Diamond model, developments in communication and IT, and an overview of Brazil's fiscal policies and tax system.
December 2010 - Domestic Market: Set to soarFGV Brazil
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
Brazil towards economic depression and the political and social changeFernando Alcoforado
Brazil is experiencing stagflation, characterized by low economic growth and high inflation. The government has tried stimulating consumption through tax cuts, but this has not increased investment. Inflation remains above targets due to rising production costs. If current economic policies continue, restricting growth and failing to reduce inflation, Brazil risks entering an economic depression with mass unemployment, business failures, and declining production and investment levels. Social unrest may also increase as purchasing power falls and inflation fuels expansion of social movements.
With Michel Temer's government conquering their first victories in congress, how will Brazil's Economy line up for the following months? This question is answered in this month's Focus Economics Report issued by the Economics Team of the UK Mission in Brazil.
This article aims to present the strategies that would make it possible to eliminate inflation in Brazil. Inflation is defined as the continuous, persistent and widespread increase in prices in general. Inflation mainly affects the less favored sections of the population, as they have less access to financial instruments to defend themselves from rising prices. Inflation is presented as one of the scourges that affect the Brazilian population at the present time because it erodes the income of all Brazilians, but it is crueler to those who have less income. The control of inflation by the Brazilian government has been extremely ineffective. Controlling the inflation of demand for goods and services would be effective if the Brazilian government planned the economy together with the productive sector so that national production meets domestic demand for goods and services. Controlling the cost inflation would be effective if the Brazilian government monitor the evolution of wages, raw materials and input prices to adopt measures to avoid their increase, encourage increased productivity in agricultural, industrial, trade and services production and promote cost reduction in inefficient electric energy and oil production systems with their planning and nationalization and in cargo transport with their planning oriented towards waterway and rail modes. The current strategy to combat demand inflation is ineffective because the government increases the basic interest rate (Selic rate) and reduces the amount of currency in circulation in the economy through the sale of government bonds that contribute to worsening the recession in the country and increase public debt. The current strategy to fight cost inflation is ineffective because the government does not work with the productive sectors to promote productivity increases in agricultural, industrial, commercial and service production. To put an end to the scourge of inflation in Brazil, it is necessary to ensure that the neoliberal economic model that has presided over the actions of the Brazilian government in the economy since 1990 is immediately abandoned and replaced by the Keynesian-based national developmentalist model that would make the government play an active role in the planning of the national economy which, with feedback and control mechanisms, would successfully combat demand and cost inflation, avoid hyperinflation and promote national development.
Brazil faced a currency crisis in 1998-1999 as investors lost faith in the government's ability to maintain the real's fixed exchange rate against the dollar. High inflation and government spending deficits weakened Brazil's economy. When Russia defaulted on its debt in 1998, investors withdrew funds from Brazil, depleting reserves. In January 1999, Brazil devalued the real by 8% initially and it fell 66% by the end of the month. The devaluation improved Brazil's current account and increased GDP as exports became cheaper. However, it also increased the country's dollar-denominated debt. Brazil could have avoided crisis by instituting a managed depreciation earlier through a pegged basket of currencies or public recognition of overvaluation.
Controlling the financial system to prevent economic debacle in brazilFernando Alcoforado
Anyone who understand economics knows that in the economic stagnation that affect Brazil at the time, economic growth is only achieved since the government raise its spending to offset the fall in consumption and investment. Who formulated this teaching was the great economist John Maynard Keynes in the mid-twentieth century. The argument put forward by the government that first need to reduce government spending and then to promote economic growth is totally irrational from the Keynesian perspective. In addition, the Michel Temer government is blackmailing with the population to say that the alternative is cutting government spending or tax increases. It is an unfortunate fact the Michel Temer government want to solve the economic crisis in Brazil that worsens every day with the adoption of fiscal adjustment that reduces public spending and tends to deepen the process of economic stagnation in the country.
- Agricultural employment share is negatively correlated with income inequality, as workers transition to higher-paying industrial and service jobs. Service sector employment share also has a negative correlation, as this labor-intensive sector tends to equalize wages.
- GDP growth volatility is positively correlated with inequality, as unstable economic conditions impact low-income groups more. Trade liberalization is negatively correlated, as it raises wages for abundant unskilled labor in Brazil.
- Industrial value-added is negatively correlated, as higher productivity in this sector tends to increase wages and reduce inequality over time.
Poverty, Inequality and Social Policies in Brazil: 1995-2009 UNDP Policy Centre
Since the mid-1990s, Brazil has undergone extensive reforms that have finally reversed the dismaying economic performance of the 1980s. In particular, poverty and inequality indicators have improved dramatically, especially since the late-2000s. This new paper published by the International Policy Centre for Inclusive Growth (IPC-IG) provides an overview of such recent trends and discusses the role played by four major government interventions: public education, the minimum wage law, Social Security pensions and Social Assistance transfers. Additionally, available data sets and methods for policy evaluation are also discussed. Check out more IPC-IG papers on social protection in the developing and emerging countries here: http://www.ipc-undp.org/CctNew.do?language=1&active=3
The Brazilian economy grew by 4.2 percent annually from 2004-2010, more than double its annual growth from 1999-2003 or indeed its growth rate over the prior quarter century. This growth was accompanied by a significant reduction in poverty and extreme poverty, especially after 2005, as well as reduced inequality. This paper looks at the combination of external changes and changes in macroeconomic policy that contributed to these results.
The overall policy framework since 1999 has consisted of a “tripod” of explicit inflation targets, a (very “dirty”) floating exchange rate regime, and specific (and quite large) targets for the primary budget surplus. The Brazilian inflation-targeting system requires that the monetary authority pursue a single objective, the control of inflation, which must remain inside a pre-defined range within a calendar year. Although the inflation target was not achieved in the years 2001 to 2003, since 2004 the government was successful in keeping inflation within the target range every single year, even in the turbulent year of 2008.
This paper shows that the Central Bank was able to meet its inflation target after 2004 through a continual appreciation of the exchange rate. It is argued by the Brazilian monetary authorities, and commonly believed in media and policy circles, that inflation is driven by changes in aggregate demand. The commonly accepted story is that when the Central Bank raises policy interest rates, it causes a reduction in aggregate demand and therefore lowers inflation. However, as the authors demonstrate, inflation in Brazil is driven by cost-push pressures and not by changes in aggregate demand; and so it is the reduction in import and export prices, due to appreciation of the Brazilian Real, that has allowed Brazil to maintain its inflation target during these years. When the Central Bank raises policy rates, this attracts capital inflows, thus appreciating the currency and reducing inflation by reducing import and export prices. Therefore, the Brazilian inflation-targeting system, in which the interest rate is used to control inflation, actually works directly through the exchange-rate cost channel.
There was more policy space for Brazil after 2003 because of more favorable external conditions. The improved current account, and the resumption of large capital inflows allowed the government to quickly repay in full – and get rid of – IMF loans and conditionalities in late 2005, reduce the overall external debt, and accumulate a massive amount of reserves. The ratio of short-term external debt to foreign exchange reserves, which had reached more than 90% on the eve of the 1999 exchange-rate crisis, fell to about 20% by 2008.
Brazil’s expansion was initially led by a boom in exports and GDP growth was not very fast; but from 2006 on, export growth lost steam and the internal market began to grow faster, thanks to a more expansionary macroeconomic policy. This was especia
This document summarizes a paper about macroeconomic policy, growth, and income distribution in Brazil during the 2000s. The paper analyzes how changes in external conditions and domestic policy contributed to improved economic performance after 2005. It discusses Brazil's inflation targeting system and how the central bank was able to meet inflation targets through exchange rate appreciation. While higher interest rates were meant to reduce demand and inflation, inflation was actually driven by cost factors and import/export prices. The paper examines Brazil's economic growth, reduction in poverty and inequality, challenges around external competitiveness, and proposes some policy alternatives.
January 2016 - Labor market at breaking pointFGV Brazil
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
How brazil must face global recession and internal economic stagnationFernando Alcoforado
This article aims to present the impacts that the ongoing global recession will have on the Brazilian economy and the solutions to deal with this gigantic problem and the internal economic stagnation.
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
This document discusses Brazil's economic performance from 2010-2020, known as the "Lost Decade". It analyzes factors that contributed to low GDP growth such as expansionary fiscal policy during inflation, high household and government debt, and trade deficits. Outcomes of the Lost Decade included low real GDP growth, credit downgrades, and impeachment of the president. The document predicts reforms in spending, labor, pensions, and privatization will boost potential GDP and investments, leading to reduced unemployment and debt over the long term.
Threats to the development of brazil and how to overcome themFernando Alcoforado
This document outlines several threats to Brazil's economic development and how to overcome them. The main threats identified are imbalances in external accounts, declining GDP growth, insufficient domestic savings, uncontrolled inflation, exploding public debt, risk of economic depression, deindustrialization, rising costs, increased regional inequalities, worsening social and environmental problems, and public sector management crisis. To address these threats, the document recommends increasing domestic production and competitiveness, adopting import substitution and a fixed exchange rate policy, raising domestic savings, renegotiating and lengthening debt payments, and encouraging investment in infrastructure and industry.
This document summarizes Brazil's economic growth experience from 1990-2010. It analyzes Brazil's turbulent past of import substitution industrialization from 1960-1980 which led to high growth but also structural problems. In the 1980s, Brazil experienced a debt crisis, hyperinflation, and economic stagnation due to failed stabilization plans. The 1994 Plano Real successfully reduced inflation through monetary and fiscal reforms and liberalization, stabilizing the economy and attracting foreign investment, leading to high growth in the 1990s.
Brazil’s Currency CrisisBy Team IV ( Chris Trick, Austin.docxAASTHA76
Brazil’s Currency Crisis
By Team IV ( Chris Trick, Austin Weaver, Tim Moore, Pat Heffernan, Chris Barnes
Why Brazil MattersBiggest economy in Latin AmericaOne of the last big countries to attempt free trade and privatization; if this fails international investors discouraged.Unified global economy is threatened if Brazilian currency fails.
HistoryBrazil had been through 6 currencies since the 1960’sIn 1994 the Real Plan was adoptedBefore it were a series of failed plans (the Cruzado Plan of 1986, Bresser plan of 1987, and more)It worked well to tame inflation and maintain exchange rate stability for 5 years
HistoryThe Real was initially indexed one-for-one with the dollarIt was quickly allowed to float thoughA policy of high interest rates to discourage speculation and over-borrowing quickly attracted a surge of capital inflowsBy the mid 1995 the Real Plan evolved into a crawling peg
HistorySaid to be the worst currency crisis in the western hemisphere to dateThe Real Plan was one of the longest running exchange rate stabilization programs
Facts of Life Before Crisis43% of Brazilians – over sixty million people - lack the essentials of a decent lifeOne in three children drop out of school without completing primary Drug gangs rule the favelas and the middle class lives behind bolted doors Half a million North-eastern farmers watch crops wither in yet one more drought The urban environment, home to four out of five Brazilians, is deteriorating fast Blacks, over-represented amongst the poor, suffer social discrimination Indians face severe threats to their economic and cultural survivalThe income gap between men and women is the worst in Latin America
Why Peg to Dollar?Needed to convince domestic and international investors that chronic inflation would be stopped.Before Real Plan, inflation was 3000%.Fixing the exchange rate was easier then reducing government commitments.
The FallIt was in a financially fragile stateIt required large capital inflows to build up the central bank to defend currencyThis built investor confidence and led to exchange rate appreciationThis fueled import-driven consumption and stifles export growthIn order to attract the inflows the real interest rate had to rise
The FallThe high interest rates lead to a rising debt burden and a deteriorating fiscal balanceA rising budget deficit and deteriorating trade balance inevitably lead to devaluationIt just could not finance its current account deficit due to insufficient long-term instruments
The FallInvestors came to believe the capital inflows were insufficient to finance its current account deficitProductivity did grow from the imported capital goods The industrial restructuring it caused was not enough to fight off the deteriorating trade balance as unemployment rose
The FallSpeculative pressure built up and it became harder and harder for the central bank to maintain the rateEventually the peg had to break; calling for a floating rat ...
As late as 1992, the United States was running budget deficits of ne.pdfarihantmum
As late as 1992, the United States was running budget deficits of nearly $300 billion. During the
remainder of the 1990\'s, deficits declined and became surpluses. As the new century began,
these surpluses again turned into deficits. •Explain the decline in deficits and subsequent
surpluses in the late 1990\'s. •Explain the return to deficit spending since the turn of the century.
•Consider the causes of the deficits and surpluses and provide your own insight as to whether
these surpluses or deficits have a \"positive\" or \"negative\" effect on our economy
Solution
As the 1990s came to an end, virtually all financial-market observers and politicians rejoiced that
budget deficits were gone and that the U.S. had entered a period of fiscal stability. Politicians on
both sides of the aisle viewed the new world of budget surpluses as an opportunity to save Social
Security, to cut Federal debt, and to lower taxes.
Budget deficits or budget surpluses are neither good nor bad, they are fiscal policy options that
can stabilize or de-stabilize an economy. The U.S. economy, under Reagan, Bush, and early
Clinton, experienced higher not lower rates of economic growth at a time when budget deficits
were at record levels and tax rates were on the decline. Over the past 20 years a period of record
budget deficits the stock market increased from 950 to over 11,000, providing ample evidence
that budget deficits are not necessarily bad for an economy.On the other hand, budget surpluses
are not necessarily good. As the budget surpluses began to expand dramatically in late 1999 and
into 2000, the stock market appeared to be reversing the record up-trend of the 1980s and \'90s.
One possible reason for the reversal: the growing budget surplus was sapping the savings of the
private sector. Consumers were able to maintain their spending only through expanding debt to
record level.
In the late 90s, the confluence of strong economic growth, decelerating federal government
spending, and substantial increases in tax rates (revenues) had the unexpected effect of producing
enormous budget surpluses. As unexpected budget surpluses burst on the scene in the late 1990s,
most mainstream economists weren’t sensitive to the contractionary impact that surpluses can
have on the economy. The reason was simple that none of their economic models ever included
the forecast of a substantial surplus.
Ronald Reagan’s was the vice president of the USA for eight years and knew firsthand how
difficult it was to bring the federal budget deficit down from 6 percent of GDP in 1983 to 2.8
percent in Reagan’s last budget. Bush knew that the many budget deals of the 1980s had been
hard fought and always involved higher taxes as part of the deficit reduction, Reagan signed into
law 11 major tax increases that raised taxes by $133 billion in 1988 or 2.7 percent of GDP.Bush
administration economists believed that an easier monetary policy was the key to stimulating
growth. But Federal Reserve Board.
Similar to Brazilian Real: History, Analysis, and Forcasts. (20)
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This is a New Zealand wide meetup event with meetup groups from Auckland, Wellington and Christchurch attending and open to anyone with an interest in digital sustainability or agile. All welcome. Joke, this is how it started. Jutta is now also available in Germany, i.e. hosted by Berlin/Brandenburg
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Unlock the full potential of the MECE (Mutually Exclusive, Collectively Exhaustive) Principle with this comprehensive PowerPoint deck. Designed to enhance your analytical skills and strategic decision-making, this presentation guides you through the fundamental concepts, advanced techniques, and practical applications of the MECE framework, ensuring you can apply it effectively in various business contexts.
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It will bring about growth and development not only in Maharashtra but also in our country as a whole, which will experience prosperity. The project will also give the Adani Group an opportunity to rise above the controversies that have been ongoing since the Adani CBI Investigation.
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3. HISTORY OF THE BRAZILIAN REAL
The Brazilian Real has been Brazils currency since 1994.
It was created from the government plan which was called the
“Plano Real”
Plano Real means “Real Plan” in Portuguese
This was an attempt by Brazils government to try and stabilize the
countries economy which has been in hyperinflation for decades.
4. “CRITICIZED”
This plan faced a lot of skepticism because it was the 7th
intervention by the gov’t and the 5th currency since 1986.
Cardoso whom was the president and Brazilian minister of
finance was the architect of the plan.
Cardoso put together a team of economists to help him construct
the plan
The Stabilizing plan was introduced in 3 stages
5. THE 3 STAGES OF THE STABILIZING
PLAN
1st Cardoso would need to win the support of Congress and
achieve a balanced budget through FSE, an emergency social
fund.
2nd would be the introduction of a new index, Unidade Real de
Valor (URV).
3rd The introduction of a new currency, which would become the
Real.
Eventually on Feb 23, 1994 congress passed the FSE, and the
URV was pegged to the U.S. American Dollar
6. VERY EFFECTIVE
Finally July 1 1994 Brazil announced its new currency the Real
and officially put an end to the old currency the Cruzeiro
The URV was very effective, and the rate of inflation remained
stable between March of 1994 through May of 1994.
The Real equaled the U.S. Dollar at the time that it was introduced
into the economy
7. HYPER INFLATION
Since the 1940’s Brazil has experienced an accelerating rate of
inflation.
The explanation of this trend is political and sociological factors as
well not just economic factors.
The most important reasons for problems caused by inflation was
the price that had to be paid for the countries rapid development.
Overtime inflation seemed to be something normal and something
you cant avoid by the Brazilian society.
8. TRADE OFF
There seemed to be a trade off relation going on between price
stability and growth
The policies that were created to lower inflation actually were a
big influence on why there was inflation
However recently since the 1990’s Brazils inflation rate seemed to
be a concern to everyone however before the 1990’s nobody
thought that it was too much of a concern
9. BRAZILS CENTRAL BANK
Throughout the years Brazil had little concern about its
government projects and how investment would be financed
Brazil did not have a Central Bank until 1964
Unlike most Central Banks Brazil lacked autonomy and decision
making abilities
Brazils Central Bank was closely tied to its government
10. BANCO DO BRASIL
Until 1986 the largest state commercial bank Banco do brasil was
free to extend loans greater than its deposits, since any currency
shortages would result in the central bank printing out more
money.
These things led to large deficits and huge increases in the
money supply
After many stabilization effects monthly inflation reached 50% in
June 1994 right before the “Real Plan” was launched
So the purpose of the plan was to introduce a currency that would
fight inflation
11. ANNUAL INFLATION
The annual inflation for Brazil was 909.7% in 1994.
By 1997 however Brazils inflation had dropped merely 4.3%
The new plan had succeeded and in adjusting inflation and in
addition to that fiscal measures were adopted to increase
government revenue.
Income tax rates were raised and there was a 15% reduction in
funds transferred by the federal government to states and
municipalities.
12. URV
URV (Unidaded Real de Valor) is the official price index that was
introduced before the Real Plan.
The government’s strategy was to have prices follow the URV
transforming them into the new currency, the Real.
To keep the new currency free of inflation monetary and fiscal
adjustments were needed
However the URV was not as efficient as predicted. The use of
the URV in the private sector to determine price changes was not
as efficient.
13. SUCCEEDED
Overall the inflation rate fell
This was mainly due to labor market stability and government
controlled prices
Now that Brazil is able to raise money in the international financial
market, foreign investment increased and lower import tariffs
allowed for foreign competition under the industrial sector of
Brazils economy
Now the new Real these changes defined a new era for the
Brazilian economy
16. CENTRAL BANK OF BRAZIL
Brazil controls their interest rates to maintain inflation at given
upper and lower bounds.
Main mission of the BCB is to hit a target range of inflation
Sacrifices the ability to respond to fiscal spending changes and prevents large
scale currency interventions
This in turn leads an indirect level of currency control
18. SHORT TERM:
INFLATION - INTEREST RATES
Slowing inflation in Brazil this year will allow the country's central
bank to adopt flexible interest rate policy, Finance Minister Guido
Mantega said Thursday.
Allows Brasilia to lower interest rates without a fear of
encouraging inflation
Is Mantega’s forecast valid?
19. 14
SHORT TERM: 12
INTEREST RATES 10
MANAGING INFLATION
8
Lower Bound
Upper Bound
Has inflation management stayed on 6
Realized
track? Poly. (Realized)
4
2
Inflation has slowed in recent
months, but assuming a modest 0
additional inflation of 0.5% for 2012
and 2013 would send prices up
again.
20. SHORT TERM:
INTEREST RATES
“Brazil's central bank has cut the country's reference Selic rate by
2 percentage points since August to 10.5%.”
Selic is the name of the Brazilian interest rate
“According to some market forecasts, the bank is seen cutting the
rate further to as low as 9% before the end of this year. “
21. SHORT TERM ANALYSIS
If inflation is kept in check, the Brazilian government will have
room to lower interest rates – this could lead to a decrease in
foreign investment and thus depreciation in the currency
This could promote the Brazilian Balance of Payments: export industries
“cheaper”, and domestic import competing companies face less invasion or
“dumping”
If inflation is not kept in check, the Brazilian government will be
forced to keep interest rates high attracting more and more
foreign capital and thus putting more pressure on the real to
appreciate.
This could hurt Brazilian Balance of Payments: encourage even more import
spending which is already high, hurt export industries and make domestic
import competing companies face more invading goods.
23. INCOME EFFECTS OF FISCAL
POLICY
Brazil has historically faced vast poverty – once considered one of
the most unequal nations on earth
Political trends over the past twenty years have been including a
broader civic spectrum
Involves bringing working class, middle class and lower class into the
conversation
Result: large social welfare programs like Bolsa Familia, Bolsa
Escola, pension programs, and high paying public positions
26. CONSEQUENCES
Larger government spending – less saving in the economy, higher
inflation, but larger social welfare and more purchasing power
Since BCB must stick with target rates, changes in fiscal policy
can disturb monetary policy
Higher inflation can lead to higher interest rates which can attract
more capital
27. CONSEQUENCES
Mantega Thursday also noted that local markets responded
positively to a government initiative Wednesday to freeze 55
billion Brazilian reais ($32 billion) in spending from the 2012
budget as part of an effort to meet fiscal savings goals.
A combination of lower government spending and lower interest
rates can offset inflation and allow Brazil to devalue its currency
by being less attractive to foreign capital
29. TRADE AND CAPITAL ACCOUNT
Since Brazil is largest economy in South America, with a 2.1
trillion dollar economy, its trade account and capital account are
doing extremely well even compared to western countries.
30. WHAT IS CAPITAL ACCOUNT?
All International Purchases or Sales of Assets
Major types of capital transfers are debt forgiveness and
migrants' goods and financial assets accompanying them as they
leave or enter the country
Capital account inflow example: exports of goods or services
31. CAPITAL ACCOUNT
Brazil has the highest net capital account in South America due to
its large and growing agricultural, mining, manufacturing, and
service sectors.
In 2010, Brazil's net capital account was about $1.14 billion
(measured in U.S. dollars)
32. BRAZIL'S CAPITAL ACCOUNT GROWTH
1975- 40 million
1983- 3 million (fought war against the UK. Bad idea)
1988- still 3 million
1990- 35 million
1995- 352 million
2005- 663 million
2010- 1.14 billion (almost double in 5 years)
34. WHY??
Answer: Brazil is the world's leading “emerging market”
economy. Growing @ 6-8% per year. U.S. is lucky to grow at
3% per year.
Brazil GDP (Equal to UK): 2.1 Trillion and growing! This high
GDP and growth rate attracts foreign direct investment and
purchasers of Brazilian government debt. (U.S. grew the same
way...foreign nations help finance your growth)
36. TRADE ACCOUNT
Trade Account is Total Exports-Total Imports
Focuses on traded goods, not services
Much easier to measure goods though
Trade deficit (Imports>Exports) can weaken a country's currency over time
Hume Theory: Deficits and weaker currency will begin to promote the
opposite over time
37. BRAZIL'S BALANCE OF TRADE
In January 2012, Brazil reported a trade surplus of $1.3 billion
Brazil's primary trading partners are the United States, the
EU, and Argentina
38. BRAZILIAN EXPORTS
Iron Ore
Industrial Raw Materials
Soybeans
Beef and Pork
Cotton
Footwear
Coffee
Autos
Automotive Parts
Machinery
39. BRAZILIAN IMPORTS
Machinery
Electrical and Transport equipment
Chemical products
Automotive parts
Electronics
(As you can see, mostly advanced finished goods from Europe
and the United States)
40. TRADE ACCOUNT JAN-JUNE 2011
In the first half of 2011, Brazilian foreign trade registered a trade
flow record U.S. $ 223.6 billion, an increase of 30.1% over the
same period in 2010, when it reached U.S. $ 170.5 billion.
For 2010, exports grew by 31.6% and imports 28.5%. These
significant increases indicate the strength of the progressive
inclusion of Brazil in international trade.
41. TRADE ACCOUNT- JANUARY 2012
In the month of January, exports reached U.S. $ 16.141 billion
and daily average of U.S. $ 733.7 million, records for the months
of January, surpassing January 2011 (U.S. $ 15.214 billion and $
724.5 million, respectively).
Imports totaled U.S. $ 17.433 billion and daily average of $ 792.4
million, a record for January, surpassing January 2011 (U.S. $
14.817 billion and $ 705.6 million, respectively)
42. TRADE ACCOUNT- JANUARY 2012
CONTINUED
The trade balance in January saw a deficit of U.S. $ 1.292
billion, reversing the result of January 2011, when he presented a
positive balance of U.S. $ 397 million.
During this period, bilateral trade reached a record figure for the
month of January of $ 33.574 billion
Summary: Trade is increasing, Brazil is growing, and some
months has a trade deficit (not a bad thing at all)
43. FEBRUARY 2012 (NOW)
During the second week of February 2012, the trade balance
registered a surplus of U.S. $ 1.155 billion, a result of exports
worth U.S. $ 5.087 billion and imports U.S. $ 3.932 billion.
This surplus was due to huge exports in commodities
(coffee, soybean, iron ore, beef) and manufacturing (oil equipment
and auto parts)
In the month so far, exports totaled U.S. $ 7.691 billion and
imports U.S. $ 6.340 billion resulting in a trade surplus
49. MONETARY POLICY MOVE
Jan 18th, 2011: Brazil’s central bank, Banco Central Do
Brasil, announced an interest rate increase of 50 basis
points, raising its overnight lending rate (Selic) from 10.75% to
11.25%.
This move was made because Brazil wants to curb its inflation
rate.
50. INFLATION
5.91% in 2010, a significant increase from 4.31% in 2009, and
considerably higher than the government’s target of 4.5%.
51. Brazil has been trying to protect its domestic industry.
In order to promote domestic products instead of exports, the
real’s value needs to be kept low.
Increasing Brazil’s key interest rate to 11.25% makes investing in
the country very attractive to foreigners. Jan 18th, 1-year Brazilian
government bond yields 12.52% while the American equivalent
yields a mere 0.25% and the U.K. will yield 0.77%
52. International investors buying reais to invest will certainly drive the
currency up in value.
A higher real makes import less expensive and more attractive
The principally affected group is therefore the domestic
manufacturing sector- the very sector the government aims to
protect.
53. THE DILEMMA
Brazil therefore faces the dilemma of protecting itself from inflation
or protecting its domestic manufacturing sector.
If the central bank stops increasing interest rates, the economy
faces the risk of overheating. On the other hand, if monetary
policy is tightened too much, in addition to domestic lending being
curbed, foreign investors will put upward pressure on the real.
54. A year later; Feb 20th, 2012
What they did.
55. ACCORDING TO THE O ESTADO DE S. PAULO
WEBSITE VIA AN ARTICLE AT SMARTMONEY
Brazil's government will use public-sector
banks to lower interest rates on lending to
consumers and companies.
Finance ministry officials have asked Banco do
Brasil SA (BBAS3.BR) and Caixa Economica
Federal to lower their interest rates, and that
way encourage private-sector competitors to
follow suit.
56. Govt officials want credit growth.
Borrowing in Brazil remains well below levels seen in many other
countries.
even though the central bank has been reducing interest rate, the
Selic, since August, report said the government is concerned that
bank lending rates haven't fallen as fast.
57. The government made a similar move during the financial and
economic crisis of 2008 and 2009, when public-sector banks cut
rates, private-sector banks followed, the report said.
58. The Govt moved from tight monetary policies to expansionary
monetary policies recently.
This is Probably as a result of the Euro debt crises. They are
trying to ward off the effect of the crisis by pursuing expansionary
monetary policies.
60. SOURCES
USD to Brazil real.
http://forex.tradingcharts.com/charts/index.php?sym=USDbrl&data=b&tz=EST&type=l&cs=1&period=
1d&defdates=1&bmonth=Jan&bday=1&byear=2006&bhour=&bmin=&emonth=Jan&eday=1&eyear=2
004&ehour=&emin=&Img+Type=png&drsi=0&ma1=0&dmacd=0&ma2=0&bol=0&dstoch=0&Submit=S
ubmit
Euro to Brazil real
http://www.x-rates.com/d/BRL/EUR/graph120.html
The dilemma: local manufacturing sector or inflation
http://seekingalpha.com/article/248096-will-brazil-s-monetary-policy-tightening-help-or-
hurt?source=feed
Brazil's Government to Use Public-Sector Banks To Lower Lending Rates
http://www.smartmoney.com/news/on/?story=ON-20120218-000174&cid=1259
Current Selic rate
http://www.nasdaq.com/article/too-soon-for-brazil-to-see-record-low-in-base-interest-rate-20120208-
01442
Brazils export data
http://www.indexmundi.com/g/g.aspx?c=br&v=85
61. SOURCES
INFLATION TARGETING Frederic S. Mishkin Graduate School of
Business, Columbia University and National Bureau of Economic
Research E-mail: fsm3@columbia.edu July 2001
http://www.bloomberg.com/markets/rates-bonds/government-
bonds/brazil/
http://www.bcb.gov.br/?FISCPOLICY
http://www.bcb.gov.br/ingles/notecon2-i.asp
http://translate.googleusercontent.com/translate_c?hl=en&rurl=transl
ate.google.com&sl=pt&tl=en&twu=1&u=http://www.desenvolvimento.
gov.br/sitio/interna/interna.php%3Farea%3D5%26menu%3D571&us
g=ALkJrhgelO1tkcws6myUfkI_d22ynUlgSA
http://www.indexmundi.com/facts/brazil/net-capital-account