The Brazilian Economy since the Great Financial Crisis of 2007/2008 (eBook)

Philip Arestis is Professor and Director of Research at the Cambridge Centre for Economics and Public Policy, Department of Land Economy, University of Cambridge, UK, and Professor at the Department of Applied Economics, University of the Basque Country, Spain. He is also Distinguished Adjunct Professor of Economics at the University of Utah, USA, and Research Associate at the Levy Economics Institute, USA. He previously served as Chief Academic (External) Adviser to the UK Government Economic Service (GES) on Professional Development in Economics. He is holder of the Queen Victoria Eugenia award of the British Hispanic Chair of Doctoral Studies, and was awarded homage by the Brazilian Keynesian Association (AKB) for his contribution to the spread of Keynesianism in Brazil. He has published a number of books and papers in academic journals.Carolina Troncoso Baltar is Associate Professor at the Institute of Economics, University of Campinas, Brazil, and researcher at the Centre of Industrial and Technological Economics (NEIT). She holds a PhD degree, Land Economy, University of Cambridge, UK. She was a visiting fellow at the East China Normal University, Shanghai, China, and was a lecturer at the Global Supply Chain, online course, organized by the Global Labour University and International Labour Organization. She has published as sole author and co-author papers in academic journals (such as Cambridge Journal of Economics, Journal of Economic Studies and Panoeconomicus) and book chapters and has produced research reports for research institutes. Her main areas of research are Macroeconomics, International Economics, External Trade and Industrial Economics.Daniela Magalhães Prates is Associate Professor at the Institute of Economics of the University of Campinas and senior researcher at the Brazilian National Council for Scientific and Technological Development (CNPq). She was visiting professor at Université Paris 13, Freie Universität/Berlin, HTW/Berlin and University of Pretoria. From September 2016 to June 2017, she has been visiting scholar at the Department of Land Economy, University of Cambridge. She has published many papers in academic journals (such as Journal of Post Keynesian Economics, International Review of Applied Economics and Monthly Review) and book chapters. Her main areas of research are International Economics and Open Macroeconomics with focus on monetary and financial issues and emerging economies.

Contents 5
List of Figures 7
List of Graphs 10
List of Charts 11
List of Tables 12
Introduction 15
Brazil at Crossroads: A Critical Assessment of Developmentalist Policies 23
1Introduction 23
2Concepts of Developmentalism 26
3Empirical Assessment of Outcomes Based on Stylized Facts 30
External Context 30
Stylized Facts of Outcomes 32
Growth Performance 32
Income Distribution: Functional and Personal 34
Productive Restructuration and External Vulnerability 35
4Public Policies Over 2003–2016 36
Macroeconomic Policies 36
Industrial Policies 41
Social Policies 43
5An Assessment of Public Policies in the PT Governments 44
6Summary and Conclusions 47
Appendix 50
References 51
Monetary Institutions and Macroeconomic Performance in Brazil after the Global Financial Crisis of 2007–2008 54
1Introduction 54
2The Brazilian Central Bank (BCB) Macroeconomic Model of ITR and the Brazilian Experience with ITR 56
3The Determinants of Inflation in Brazil and the Macroeconomic Imbalances Under the ITR (1999–2016) 61
A Brief Analysis on the Determinants of Inflation 61
The Macroeconomic Imbalances Resulting from the Implementation of the ITR 64
4Empirical Research on the Effects of Monetary Shocks in Brazil 67
5Concluding Remarks 76
References 78
Asymmetric Exchange Rate Pass-Through: Evidence, Inflation Dynamics and Policy Implications for Brazil (1999–2016) 82
1Introduction 82
2Inflation and Macroeconomic Policy in Brazil: A Brief Overview 85
3Review of Literature 90
Exchange Rate Pass-Through in Brazil 90
Asymmetric Exchange Rate Pass-Through: Theory 92
4Asymmetric Exchange Rate Pass-Through: Empirical Evidence from Brazil (1999–2016) 94
Data Base 94
Econometric Estimation and Results 96
5Concluding Remarks: Inflation Dynamics and Policy Implications 100
Appendix 102
References 106
New Features of the Brazilian External Sector Since the Great Global Crisis 113
1Introduction 113
2External Sector in the Brazilian Macroeconomic Debate 115
3A Changing World Since 2008 117
4The ‘New Reality’ of the External Sector 120
The Current Account 120
Financial Flows 125
Stocks, ‘De-Dollarization’ and External Debt 128
5Indirect Channels 132
Global Productive Cycle, Markets and Domestic Production 132
Global Financial Cycle, Credit, Wealth 134
6Summary and Conclusions 137
References 139
Brazilian Industry: Recent Performance and Future Challenges 142
1Introduction 142
2Changes in the Global Productive Structure 143
3Theoretical Background 149
4Recent Brazilian Manufacturing Industry Performance 152
5Final Remarks 165
References 167
Financialisation and Investment Behaviour Among Non-Financial Corporations in Brazil Since the Global Crisis 172
1Introduction 172
2Corporate Strategies at the International Level: Refocusing and Financialisation 174
3Corporate Restructuring and Behaviour in Brazil Since the 1990s 180
4Microeconomic Trends: The Behaviour of Brazil’s Non-Financial Corporations 187
5Debt and Investment in Brazil Since the Global Crisis: A Sectoral Perspective 192
6Summary and Conclusions 195
References 197
Income Distribution, Productivity and Economic Growth: Empirical Evidence in the Case of Brazil 201
1Introduction 201
2Brazilian Economic Performance in the 2000s 203
3Literature Review 212
4Theoretical Background 216
5Empirical Investigation 221
6Summary and Conclusions 223
References 225
Brazilian Fiscal Policy in Perspective: From Expansion to Austerity 228
1Introduction 228
2Fiscal Policy in Perspective: The Expansionary Period 230
3Escalation of the Public Debt and the Macroeconomic Management Puzzle 240
4Fiscal Policy in Perspective: The Shift Towards Austerity 245
5Final Remarks 249
References 251
Economic and Social Policies Inconsistency, Conventions, and Crisis in the Brazilian Economy, 2011–2016 254
1Introduction 254
2Conventions and the Role of Government in Framing Them 256
The Notion of Conventions and Post-Keynesian Developments on the Topic 256
The Role of Government in Framing Conventions 257
3Post-Keynesian Macroeconomic Policy Mix 260
4The Role of Conventions in the Brazilian Economic Slump: 2011–2016 264
Exchange Rate Policy and Conventions 265
Conventions and Fiscal Policy Problems 271
An Erratic Monetary Policy 275
Further Issues: “Lava Jato” Lawsuit and the Political Crisis 277
5Final Remarks 278
References 279
The Impact of the Global Financial Crisis on the Brazilian Stock Market 282
1Introduction 282
2Boom, Bust, and Recovery in the Biggest Stock Market in Latin America 283
Brazilian Stock Market Overview 283
The Brazilian Stock Market Bonanza and Crash 284
The Letters Soup Crisis Lexicon: V-shaped and U-Shaped Busts-Recoveries 287
The Drops Within Ibovespa V-Shaped Bust-Recovery: Crisis Made in the USA 288
The Ibovespa U-Shaped Bust-Recovery: Commodities Shock and Political Unrest 290
3Crisis Transmission to the Brazilian Stock Market 293
Conceptual Definition of Financial Contagion 293
Theoretical Framework of Financial Contagion Modelling 295
Potential Vectors of Contagion 301
4Empirical Discussion and Results 302
A Brief Discussion of the Adopted Indices 302
Data 303
Key Negative Exogenous Events as Indicators 303
Empirical Evidence of Contagion in the Brazilian Stock Market 305
Vectors of Contagion 307
5Summary and Conclusions 311
References 311
Foreign Exchange Derivatives and Financial Fragility in Brazil 315
1Introduction 315
2Brief Historical Review 318
3The Contagion Effect of the Global Financial Crisis 325
4The Aftermath of the Global Financial Crisis 328
5Brazil’s Political and Economic Upheaval 336
6Final Remarks 339
References 340
The Brazilian Credit Market During the Great Recession 344
1Introduction 344
2State and Financial Intermediation: Literature Review 347
3Credit Behavior in the Brazilian in the 2000s 351
Stylized Facts, Methodology, and Data 351
Evidence from the Markovian-Switching Dynamic Regression 353
Further Evidence from the VEC Model 359
4Summary and Conclusions 364
References 366
Index 371