Study of the Trilemma Policies and Their Impacts on Inflation, Growth and Volatility for Brazil

Dr. Yu Hsing

Volume 13 Issue 5

Global Journal of Management and Business

This paper finds support for the trilemma for Brazil, suggesting that the three trilemma policies are binding and constrained. Adopting an independently floating exchange rate regime, Brazil has pursued the policy combination of monetary independence and financial integration in recent years. More exchange rate stability or more financial integration reduces the inflation rate, and more financial integration reduces inflation volatility. More monetary independence reduces the growth rate. More financial integration reduces output volatility. Hence, more exchange rate stability and more financial integration produce positive benefits whereas more monetary independence yields a negative impact on the growth rate.