Research shows dollarisation and rates link
Since the adoption of inflation targeting and a floating exchange rate in 1999, real interest rates in Brazil have fallen as levels of dollarisation in the economy have dropped, research published by the International Monetary Fund finds.
According to the research, Brazil provides a natural case study to see whether there is a link between real interest rates and dollarisation because of its low degree of financial dollarisation and its very high real interest rates. The estimated model is
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