Volatility x Response: Brazil (Luporini)

Macroeconomic volatility and policy response: the case of Brazil by Viviane Luporini. The purpose of this paper is to analyze the relationship between macroeconomic volatility and relevant fiscal variables and investigate how the main restrictions to the Brazilian fiscal space has affected the country’s capacity to respond to crises. The analysis indicate that domestically, the nominal interest rate has been the major source of macroeconomic instability while the exchange rate market has been main channel through which international shocks have affected the Brazilian economy.