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Comparison of Monetary Policy Instruments

COMPARISON OF MONETARY POLICY INSTRUMENTS

The objective of this research is twofaceted. First, the monetary policy instruments applied by the central banks in Brazil and the United Kingdom, together with the effectiveness of those applications, are examined and compared with one another. Second, the application of monetary instruments and the effectiveness of that application by the central bank in the United Statesthe Federal Reserveare examined.

The Use of Monetary Instruments in Brazil

The application of monetary instruments and the effectiveness of those applications are considered separately for Brazil and the United Kingdom. The use of monetary instruments by the two countries then is compared.

The Use of Monetary Instruments in Brazil

The first Arab crude oil embargo in the early1970s set the economies of Latin American countries into an economic tailspin. The resulting economic problems were particularly acute in Brazil Sola, 1993, pp. 2-19.

In Brazil, economic chaos was punctuated by conflicting experimentation in the development and implementation of economic policy by domestic leaders, and by meddling from the international communityprimarily the United States and its surrogate the International Monetary Fund (IMF) (Pang, 1989, pp. 127-140). In Brazil, numerous economic stabilization plans were implemented by the government, and most of these plans were subsequently approved by the IMF. Complicating the stabilization problem in Brazil was the country's massive external debt. Brazil's external debt at the beginning of 1994 was equal to 49 percent of GDP.

Over the years, Brazil has implemented several plans and actions intended to solve its ongoing economic and debt problems. All of these plans have been based in monetary policy, and have involved the use of monetary policy instruments (Pang, 1989, pp. 123-140). These plans and actions have ranged from the theoretically complex Cr...

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Comparison of Monetary Policy Instruments. (1969, December 31). In LotsofEssays.com. Retrieved 11:15, March 29, 2024, from https://www.lotsofessays.com/viewpaper/1690004.html