Armínio Fraga

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Unlike common wisdom, sterilized FX purchases under inflation targeting, i.e., those that keep the interest rate at the level targeted by the central bank, generally increase aggregate demand. We resort to a simple model with a credit channel to argue that FX purchases, by funding bank credit, end up increasing aggregate and money demand, while expanding(More)
T he economic performance of Latin America was disastrous in the 1980s. In what is often called the “lost decade,” the region’s economy was disrupted by an international debt crisis and raging inflation. Per capita GDP declined at an average annual rate of 0.6 percent in the 1980s. Toward the end of the 1980s, the frustration with the performance led to a(More)
We examine whether Brazilian sovereign spreads of over 20 percent in 2002 could be due to contagion from Argentina or to domestic politics -or both. Treating unilateral debt restructuring as a policy variable gives rise to the possibility of self-fulfilling crisis, which can be triggered by contagion. We explore the political-economy explanation of panic in(More)
III Preface T he Committee on International Economic Policy and Reform is a non-partisan, independent group of experts, comprised of academics and former government and central bank officials. Its objective is to analyze global monetary and financial problems, offer systematic analysis, and advance reform ideas. The Committee attempts to identify areas in(More)
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