A ECONOMIA POLÍTICA DA CONVERSIBILIDADE DO REAL: UMA CRÍTICA A ARIDA

This paper aims at discussing critically Pérsio Arida's proposal of adopting full currency convertibility in Brazil. Arida (2003a, 2003b, 2004) points out that currency convertibility would make for lower domestic interest rates in Brazil, as well as for lower interest rates for the Brazilian external bonds. Besides, currency convertibility would stabilize capital flows, as well as exchange rate volatility in Brazil. We argue in this paper that this proposal does not lead necessarily either to less exchange rate volatility, or to lower interest rates. Finally, we close the paper by presenting some alternatives in terms of capital controls in Brazil.