terça-feira, 12 de setembro de 2017

Interest rates and culture

Woke up this morning and promised not to be stunned by human stupiduty. I failed miserably.
Master Nakano is the culprit. In his piece published in The Value, our Yoda comes up with a novel theory for Brazil's high interest rates: it is related to cultural factors.
Forget risk, clogged transmission channels, crazy fiscal, indexation.
Nakano's storyline is (roughly) as follows: brazucas planted coffee, which meant seazonal revenues. These were saved to allow for consumption smoothing thru the year. Because of the periodic nature of revenues, savers demanded high interest rates (the money has to make due for an entire crop year!!!) and got what they wanted. The influential also liked to treat themselves with nice imports from Europe and thus demanded an overvalued exchange rate. To appease their luxurious desires at a reasonable price.

And that is why we got here. It is all about cultural traits. Sloth and lust.

If you are striving to estimate neutral rates using sophisticated econometrics, and your likelihood is not converging, try adding coffee production to your model.

Before i go, let me propose a new growth theory: growth rates are a function of initial GDP per head and of the number of extreme morons in the country. I expect both coeficients to be negative.


3 comentários:

It is a mixture of disbelief with the article in a large newspaper, blaming the culture and the urge to laugh that is too big


quanto preconceito desse nakano

O fetiche com o qual os desenvolvimentistas têm para associar os problemas crônicos com os níveis de preços do Brasil e a agricultura, beiram o fetiche sexual. É impressionante, para esse pessoal só existem dois problemas na economia brasileira: câmbio sobrevalorizado e quebra de safra.