Resumo

MACEDO CINTRA, Marcos Antonio. Smooth Failure: The Macroeconomic Policy of Brazil during 1999-2005. Inv. Econ [online]. 2007, vol.66, n.261, pp.61-96. ISSN 0185-1667.

This paper supports the thesis that the Brazilian macroeconomic model has proven to be capable of creating economic cycles which follow expansion and retraction movements of liquidity and world trade. However, it has not been able to bring the country back to the economic and social development pathway. Exchange, monetary and fiscal policies are contradictory and contribute to obstruct sustained growth, strangle infrastructure enhancement, and limit expansion of social expenditure. This paper is divided into four sections. The first part deals with the external account adjustment and possible impacts of exchange rate valuation since mid-2004. The second section analyses how inappropriate the inflation target policy is under domestic pricing conditions. The third part describes the role of fiscal policy, which is the adjustment variable of the macroeconomic model since it bears impacts of exchange rate and monetary policies. Final considerations outline possible alternative policies as an attempt to dismantle the vicious circle of the macroeconomic model with financial liberalization.

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