Diogo A. Guillén
Itau-Unibanco Asset Management
Institutional Affiliation: Itau-Unibanco Asset Management
NBER Working Papers and Publications
|January 2019||The Monetary and Fiscal History of Brazil, 1960-2016|
with Joao Ayres, Marcio Garcia, Patrick J. Kehoe: w25421
Brazil has had a long period of high inflation. It peaked around 100 percent per year in 1964, decreased until the first oil shock (1973), but accelerated again afterward, reaching levels above 100 percent on average between 1980 and 1994. This last period coincided with severe balance of payments problems and economic stagnation that followed the external debt crisis in the early 1980s. We show that the high-inflation period (1960–1994) was characterized by a combination of fiscal deficits, passive monetary policy, and constraints on debt financing. The transition to the low-inflation period (1995–2016) was characterized by improvements in all of these features, but it did not lead to significant improvements in economic growth. In addition, we document a strong positive correlation bet...