Exchange rate, dollarization and competitiveness

Abstract

Differently from previous situations, inflation in Brazil follows a very difficult
equilibrium: it remains very high, but do not explode in a hyperinflation. This process leads
to faint output and persistent inflation-based distortions. The author suggests a Koreaninspired
solution, where the State has an active role in promoting industries and exports.
An important instrument is the exchange rate.

JEL Classification: E31; L52; F31.