Notes on the Recent Economic Development Performance of Brazil: The Policy Challenges for the Future
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Date
1990-05
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Ohio State University. Department of Agricultural, Environmental, and Development Economics
Abstract
The Collor reforms in economic policy represent a novel approach to stem hyperinflation, particularly in freezing savings accounts beyond a minimum level for 18 months. While this drastic reduction in the velocity of money has had a less regressive impact on the population (in the short run) than more conventional deflationary measures, it has clearly damaged the long run potential for domestic savings mobilization and financial intermediation. Furthermore this will gain little in the long run unless the government drastically reduces its public sector borrowing requirements. Privatization, public sector layoffs, and attention to a more depreciated real exchange rate, the removal of quantitative restrictions on imports and a reduced uniform tariff structure are all necessary to restructure the economy for the future.