The winner of the Nobel prize in economics and professor at Columbia University (USA), Joseph Stiglitz, in a recent interview conducted by CNN Brasil, commented on the current situation of the Brazilian economy and the practices that President Luiz Inácio Lula da Silva (PT ) has been taking since assuming his third term. For Joseph, Lula’s attitude in wanting to maintain greater control of the Central Bank is correct. Check out the best snippets below:
BBC News – In Brazil, President Lula has been fighting for weeks with the president of the Central Bank, Roberto Campos Neto, over the level of the country’s basic interest rate, which is currently above 13%. Lula argues that interest rates are strangling the economy, while Campos Neto defends the Central Bank’s mandate to pursue the country’s inflation target of around 3%. How do you see this dispute in Brazil?
Stiglitz – First, it is necessary to say that inflation targets – which in Europe [e nos EUA] is 2%, and you said 3% [no Brasil] – are taken out of nowhere. They have no basis in economic theory or economic experience. (…)
There is a huge cost to having high interest rates. This puts Brazil at a competitive disadvantage, strangles Brazilian companies, weakens the country’s economy. So President Lula is absolutely right to be concerned about these issues.
Returning to the question of the inflation target, the most recent theoretical research, carried out over a long period of time, shows that, in moments of rapid adjustment of the economy and structural change – the type of thing we are experiencing in the post-covid world and the As we move towards the green transition – a higher inflation rate actually makes the adjustment easier. (…)
Changing the subject to another area of his expertise, Lula’s economic team hopes to approve a tax reform this year. This reform should have a first stage focused on simplifying consumption taxes into a value added tax, and a second stage focused on Income Tax. As someone who has been discussing the use of taxation as a way to fight inequality for years, what is your advice for Brazil, on the eve of a reform?
It is obviously important to have an efficient tax system and this requires simplification. But what is even more or equally important for Brazil is to reformulate the tax system to combat inequality, making this system more progressive. [que arrecada mais de quem tem mais renda e patrimônio].
I cannot opine on Brazilian policy, but I believe that increasing the progressivity of Brazil’s tax system should be a priority. Given the country’s high level of inequality, this should be at the top of the agenda. (…)
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