ABSTRACT
Macroeconomic comparisons between Brazil and Argentina suggest a striking repetition of events. In both countries, exceptionally high inflation rates have plagued authoritarian as well as democratic regimes. In Brazil, the real exchange rate becomes more stable after 1969, but in Argentina its volatility increases. In Brazil, as in Argentina, the government directly controls a substantial part of the economy, and the budget has been in substantial deficit. This chapter starts with comparisons of a broad nature and discusses the relationships among external debt, budget deficits, and inflation, introducing a theme. It reports on the crisis of the 1890s, and the third briefly reviews the debt cycle of the 1930s. The chapter investigates the state of the two economies. It shows how interest recycling in domestic currency might promote investment and development. The chapter discusses the prospective scenarios for Brazil and Argentina in the 1990s.
