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The Decline and Fall of Brazil's Cruzado

Published online by Cambridge University Press:  12 October 2022

Werner Baer  and
Paul Beckerman
Werner Baer
Affiliation:
University of Illinois at Urbana-Champaign
Paul Beckerman
Affiliation:
Federal Reserve Bank of New York
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On 28 February 1986, the Brazilian government announced a “heterodox” inflation stabilization program that rapidly came to be called the Plano Cruzado. It was intended to halt an inflation that appeared to be escaping control and untamable through orthodox stabilization policies. Although at first the Plano Cruzado seemed to succeed dramatically in eliminating inflation without recessionary side effects, it failed by the end of 1986, as inflation revived, external accounts collapsed, and real growth sagged.

Type
Research Article
Information
Latin American Research Review , Volume 24 , Issue 1 , 1989 , pp. 35 - 64
Copyright
Copyright © 1989 by the University of Texas Press

Footnotes

*

The views expressed are those of the writers and do not necessarily reflect the views of the Federal Reserve Bank of New York or the Federal Reserve System. The authors wish to thank Thomas Trebat and four anonymous LARR reviewers for many helpful suggestions. The authors alone are responsible for any errors of fact or judgment.

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