ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Convertibility: Brazilian Experience

The proponents of free capital movement claim that one advantage is the supervision of economic policies by the financial market in the direction of "prudent" policies. The Brazilian case shows precisely the opposite: inflows have not been concerned about fiscal and exchange rate "irresponsibility" and have eagerly responded to arbitrage opportunities, until the "market mood" suddenly changes, resulting in a mix of herd behaviour and a speculative attack on the national currency.

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