Economic policies are a set of measures that aim to achieve a state of social welfare that is satisfactory to all citizens and favorable to the increasingly constant development of a nation.
All these measures have consequences, which may be positive or negative, both for citizens and investors; in the scope of economic policies, especially, it is very important to pay attention to these decisions, as they can be decisive both in the fixed-income and variable-income markets.
To avoid any doubts, we explain everything you need to know about economic policies in this article.
In this text, you will read about the following:
- What are economic policies?
- Why are they important for Brazil?
- What are the objectives of economic policy?
- The 3 main economic policies in Brazil are fiscal, monetary, and exchange rate.
What are economic policies?
Economic policies are a set of actions involving the Legislative, Executive, and bodies such as the Central Bank that aim to produce a certain impact on the country’s economic situation.
Some of these policies are defined before a given government takes power, and others are defined as situations that require this type of intervention to start arising.
All these decisions can impact not only the personal lives of the country’s citizens but also the financial market and, consequently, investments since everything connected to the economy is extremely volatile and speculative.
It is also for this reason that voters need to find out more about the politicians they intend to elect, as they are primarily responsible for determining the nation’s economic paths.
Read also: How do interest rate hikes in the US affect Brazilian investors?
What are the objectives of economic policy?
The main objective of an economic policy is to achieve goals related to the economic situation of a country.
There is an infinity of goals to be achieved, and consequently, there are several possibilities to reach the final objective.
Throughout Brazil’s history, we have been able to experience different types of economic policies as presidents were elected.
If, on the one hand, this allowed a lot of experimentation, on the other hand, it hindered the full implementation of structural economic policies that would really bring about consistent changes in the long term.
To elucidate this characteristic, it is enough to analyze the difference between the economic policies of the early 1990s as opposed to those of the 2000s.
While the first sought to stabilize the economy (the Real Plan was implemented in this periodical, for example), the second had an expansionist nature, and programs such as the PAC (Growth Acceleration Program) were created.
Thus, it is possible to observe that economic policies can have different objectives, depending on the national and global economic moment, the governments in office, and also the needs of the population at that time or even in the long term.
As we have seen, economic policies are essential to keep a country’s economy working as well as possible.
Through joint actions between the Government, the Central Bank, and the Executive and Legislative powers, these measures seek to:
- achieve a balance of accounts (trying to make spending less than earnings);
- control the amount of money in circulation to avoid high inflation;
- make the real a valued currency in international markets.
Therefore, it is very important to pay attention to the measures taken by government officials, to monitor the results to understand whether these decisions are paying off and whether they are achieving the expected results.
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- Brazil: Economic Policies and Institutions in the Twenty-first Century
- Restructuring the Economic Policy Framework in Brazil: Genuine or Gattopardo change?
- STRUCTURAL CHANGE AND ECONOMIC DEVELOPMENT: IS BRAZIL CATCHING UP OR FALLING BEHIND?
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