Macroeconomic management and the division of powers in Brazil : perspectives for the nineties

The federal authority for macroeconomic management in Brazil has experienced a profound change as a result of the institutional changes that culminated with the promulgation of a new Federal Constitution in October of 1988. This paper examines the implications of the new fiscal arrangements for the exercise of macroeconomic policies by the federal government. It examines how recent changes in the division of powers among federal, state, and local governments in Brazil have affected the conditions for macroeconomic management in that country. This examination gains an added significance given that the erratic character of macroeconomic performance in Brazil has often been blamed on macroeconomic mismanagement. It focuses on how federal control of the policy variables has been affected by the latest development in Brazilian institutions.