A substituição de moeda no Brasil: a moeda indexada

Abstract

The so-called dollarization process occurred in several Latin American countries where a foreign currency (dollar) substituted the domestic money. In the Brazilian economy due to the traditional indexation system and the sophisticated financial sector indexed money substituted the domestic money as a store-of-value, whereas domestic currency is used only as a medium of exchange. This paper presents an analysis of currency substitution in Brazil. First, this paper reports the results of an econometric analysis for the period 1986/91 when currency substitution became important. Then, a theoretical model of an indexed money economy is presented and the dynamics of inflation is analysed in this environment.