Restrição cambial e os limites da política econômica

Abstract

The article presents a macroeconomic model of Brazilian economy in the eighties by adding to a conventional IS-LM structure the following hypothesis: a) the debt crisis makes the foreign exchange restriction binding; b) imperfect competition in the goods markets; and c) the government has reached the limits of the internal public debt. Major conclusions are: a) imperfect competition impose additional limits to the country's transfer payment capacity; b) devaluation can bring contractionary effects; and c) due to disequilibria in markets for goods, money and foreign exchange, the qualitative effects of monetary and fiscal upon domestic activity policies are uncertain, that is, the same policy can either have contractionary or expansionary effects depending on the binding restriction.