Roubini Topic Archive: Latin America
The macroeconomic regime implanted in Brazil during the second administration of Fernando Henrique Cardoso, and largely maintained by his successor, is typical of those of the advanced countries. The anchor is provided by an inflation-targeting regime (with a target inflation rate somewhat greater than in most advanced countries, of 4.5 percent a year, with a band around it of +/–2 percent). The exchange rate floats. The float is often described as free, but given the extent of recent reserve accumulation it would not qualify as a free float as understood by most economists. Fiscal policy has actually been more ambitious under the Lula regime, resulting for a time in a primary surplus of at least 4.25 percent of GDP (subsequently reduced to allow for a higher rate of public investment, and also temporarily reduced further to help combat the crisis). Monetary policy has then been directed at achieving the inflation target given fiscal policy, which—given history—has implied maintaining high interest rates.
Uniquely BRICs (Brazil, Russia, India, and China) has become a political grouping after having been invented by Jim O’Neill at Goldman Sachs. In June 2009, Russia organized the first BRIC summit, but will it hold?
The emerging economies will soon account for most of the world economy. We are at a crossroads of world history, as Oswald Spengler caught in his pessimistic 1918 book Der Untergang des Abendlandes or Paul Kennedy in his 1988 book The Rise and Fall of the Great Powers.
Keynote Speech at the Global Human Resources Forum, Seoul, Korea November 4, 2009 The International Economic Order of the 20th Century The current international economic system was created at the end of the Second World War. Its overarching goals were to avoid a repetition of the Great Depression of the 1930s, which was severely deepened […]