The ‘Plano Real’ Stabilization Program
Between 1985 and 1993, the Brazilian policymakers implemented six ineffective stabilization plans. The ‘Plano Real’, launched in mid-1993, was a groundbreaking achievement against the inflationary spiral that afflicted Brazil since the mid-80s. The disinflation process was remarkably fast: the IPCA’s accumulated inflation declined from 752.27% during the first six months of 1994 to 18.57% from July to December 1994. A new currency, the Brazilian Real (BRL), came into force on July 1, 1994, embodying a major milestone in the Brazilian inflationary history.
In 1995, the annual inflation rate decreased to 22%. Since then, several international and domestic shocks have put the price stability at risk. However, the huge disinflation achieved by the “Plano Real" in addition to deep structural and institutional reforms —including theinflation-targeting regimeadopted in mid-1999 — accomplished what previous stabilization plans were not able to achieve: a sustainable long-term price stability.
Source: Central Bank of Brazil (https://www.bcb.gov.br/en/monetarypolicy/realplan)
Speakers:
Edmar Lisboa Bacha is a Brazilian economist. He participated in the economic team that established the Plano Real, during the Itamar Franco government. Since 2003, he has been director of the think tank Casa das Garças, an institution dedicated to economic studies and debates, in Rio de Janeiro. He has been a member of the Brazilian Academy of Sciences since December 2010. He took office as a member of the Brazilian Academy of Letters on April 7, 2017, in chair 40. He is considered one of the "fathers" of the Real Plan, completed his doctorate in economics at Yale University, with a thesis on Brazilian coffee policy and the international coffee market.
Gustavo H.B. Franco holds a bachelor's degree (1979) and master's degree (1982) in economics from Pontifical Catholic University of Rio de Janeiro and a Ph.D (1986) from Harvard University. He is a founding partner of Rio Bravo Investimentos. He was president of the Central Bank of Brazil, and also director of the International Area of the Central Bank and Deputy Secretary of Economic Policy at the Ministry of Finance, between 1993 and 1999. Gustavo Franco participates in several advisory and management boards and writes regularly for newspapers and magazines. After completing his Phd at Harvad in 1986, he returned to Brazil as a faculty member at the Economics Department at PUC-Rio. Franco worked as a professor, researcher, and consultant from 1986 to 1993, when he was called to work with Fernando Henrique Cardoso, the newly nominated Finance Minister, who was then starting his tenure.
Márcio Garcia has been a Professor of Economics at the Department of Economics of the Pontifical Catholic University of Rio de Janeiro since 1991, having already served as Chairman and Director of both Graduate and Undergraduate Studies. He holds a Ph.D. in Economics from Stanford University. His areas of research are International Finance and Monetary Economics. He has been visiting professor/scholar at the economics departments of Stanford, Chicago, MIT and MIT/Sloan, in the US, and at Paris School of Economics (then, DELTA) and Université D’Evry-Val-D’Essone, in France. He is a research associate of CNPq and FAPERJ and a member of the Bellagio Group.
Marcelo C. Medeiros is Professor of Economics at the University of Illinois at Urbana Champaign, where he has the prestigious Jorge Paulo Lemann Chair In Brazilian Economy. Marcelo has a BA, MSc. and PhD degrees in Electrical Engineering from the Pontifical Catholic University of Rio de Janeiro (PUC-Rio), with an emphasis in Statistics, Optimization and Control Theory. Before joining the University of Illinois, Marcelo was Professor at the Department of Economics at PUC-Rio for 22 years, where he taught, researched, and acted as director of both undergraduate studies and the master’s program in economics and finance. His area of research is econometrics and data science, and he is particularly interested in the intersection between econometric/statistical theory and cutting-edge machine learning tools.
