Brazil in the 1990s: a successful transition?

Abstract

This paper looks at the transformations that Brazil’s economy went through in the 1990s, which involved the adoption of a new macroeconomic policy framework and market-friendly reforms. It argues that, despite a series of policy missteps and severe external shocks, this new policy regime have laid the foundations for the resumption of sustained growth-cum-price stability. It also argues, though, that this outcome hinges critically on the country’s ability to consolidate and deepen its commitment to free trade and a macroeconomic regime which rests on three pillars: fiscal austerity, inflation targets and flexible exchange rates.