Can Jurisdictional Uncertainty and Capital Controls Explain the High Level of Real Interest Rates in Brazil? Evidence from Panel Data

Fernando M Gonçalves, Márcio Holland () and Andrei Spacov

Revista Brasileira de Economia - RBE, 2007, vol. 61, issue 1

Abstract: This paper tests the assertion, popularized by Arida, Bacha, and Lara-Resende (2005), that risks associated with the jurisdiction and currency inconvertibility are relevant determinants of the high level of short-term real interest rates in Brazil. The results are by and large unfavorable not only to their conjecture, but also to variants of their argument. The results further indicate that traditional monetary and fiscal factors are far more relevant to explain the level of short-term real interest rates than the binomial jurisdictional uncertainty/ currency inconvertibility is.

Date: 2007
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Working Paper: CAN JURISDICTIONAL UNCERTAINTY AND CAPITAL CONTROLS EXPLAIN THE HIGH LEVEL OF REAL INTEREST RATES IN BRAZIL? EVIDENCE FROM PANEL DATA (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:fgv:epgrbe:v:61:y:2007:i:1:a:1015

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