On high interest rates in Brazil

AUTOR(ES)
FONTE

Brazil. J. Polit. Econ.

DATA DE PUBLICAÇÃO

2014-03

RESUMO

This article examines the question of why interest rates are so high in Brazil as compared to the international average. It looks at theoretical arguments based on excessive government deficits, structural lack of private savings, inflation bias, excessive investment demand and fear of floating. An informal look at the evidence does not strongly corroborate any of these arguments. Hence a wise central bank should consider "testing" the market to make sure it is not dealing with an extreme equilibrium configuration or a long standing disequilibrium.

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