This paper aims to analyze the relationship between capital account liberalization, economic performance and macroeconomic stability in Brazil. For this purpose, besides a review of the literature, the paper makes an empirical study of the effects of financial liberalization in Brazil on a set of macroeconomic variables with the VAR methodology, using two models: one with a de jure index of financial liberalization (ILF) and another with a de facto index of financial integration (IIF). In the first model, the study intends to evaluate the proposal that financial liberalization results in a reduction of country-risk and, consequently, of the domestic interest rate. In the second case, it aims to assess the hypothesis that financial liberalization has a positive effect on economic growth and macroeconomic stability vis-à-vis the view of critics of financial liberalization that this generates unstable effects in developing economies.
liberalization of the capital account; economic growth; Brazilian economy
