Alexandre B. Cunha

Inflation Tax and Money Essentiality

This chapter addresses the issue of money essentiality using Brock’s (1975) model. We present an argument which casts doubt on the conclusion reached by Obstfeld and Rogoff (1983), henceforth called O–R, based on the same theoretical framework. According to O–R, speculative hyperinflation—under a pure fiat money regime—can be ruled out only when severe restrictions are placed on individual preferences, e.g., agents must have infinitely negative utility when their real balances are zero. We argue that this restriction can be tested with data from hyperinflation experiments by looking at the behavior of the inflation tax, as real balances approach zero.

Brazilian Business Cycles and Growth from 1850 to 2000

We study the cyclical and growth properties of Brazilian per capita output from 1850 to 2000. We find that, contrary to some developed countries, Brazil did not experience large changes in the volatility of per capita output. However, we obtained evidence that the oscillations in economic activity became more persistent after World War II.

Ciclos econômicos regionais no Brasil de 1985 a 2002: uma introdução

Este artigo estuda as propriedades do componente ciclico do produto interno bruto per capita das unidades federativas (UFs) do Brasil no periodo 1985-2002. Observou-se que as UFs tiveram, em media, ciclos mais volateis e menos persistentes do que o ciclo do pais. Verificou-se tambem que nao houve uma propensao para que as diversas UFs experimentassem recessoes e expansoes em datas coincidentes.

Brazilian inflation and GDP from 1850 to 2000: an empirical investigation

The question of whether a policy that leads to low inflation can hamper real economic activity and growth is a recurrent one in Brazil. In this essay we used yearly data to study the behavior of Brazilian inflation and GDP from 1850 to 2000. We used econometric and business cycles techniques to study the behavior of these variables in time and frequency domains. The results suggest the absence of positive comovement between the series. Thus, the empirical evidence apparently implies that the option of easing up on inflation to avoid a slowdown in real economic activity and growth is not available to Brazilian policy makers.

The impacts of trade blocks and tax reforms on the Brazilian economy

This paper uses a general equilibrium model to evaluate the impacts of trade agreements and tax reforms on the Brazilian economy. The model predicts that welfare gains will happen whether Argentina reduces the tariffs it places on Brazilian products or the Free Trade Area of the Americas (FTAA) is implemented. However, the FTAA engenders larger welfare gains. These gains will be even larger if the FTAA is implemented simultaneously to a reduction on domestic consumption taxes. These findings suggest that most of the gains come from the reduction of Brazilian tariff and tax rates.

Managing public debt, money supply and foreign assets: some indeterminacy results

We provide in this paper three indeterminacy results concerning competitive equilibrium in an open economy monetary model. First, we show that if Friedmans prescription of zero nominal interest rate is implemented, then the path of the nominal balances is not uniquely determined. Second, we show that the maturity of the public debt is undetermined in a competitive equilibrium. Finally, we show that any competitive equilibrium allocation and prices can be decentralized by distinct exchange-rate regimes.