Luiz Carlos Bresser-Pereira
Texto para Discussão EESP/FGV 399,, junho 2015

The Brazilian economy is quasi stagnant from 1990, because since the 1980s it dos not have public savings to finance public investments, and because, in 1990, it dismantled the mechanism that neutralized the Dutch disease. In consequence of this, of the belief in “growth with foreign” and of high interest rates, exchange rate turned overvalued chronically and cyclically. The interest rates, on their turn, reflect the political power of the rentiers-financiers. Thus, Brazil is caught in a high interest rate overvalued currency trap that makes the competent industrial firms not competitive and unable to invest.