Brazil in the 21st century: How to escape the high real interest trap?

The hope that lower real interest rates and higher growth would follow the floatation of the currency was in large measure frustrated. Two international liquidity crises, caused by the reversal of capital flows, hit in 2001 and 2002. These crises were associated with higher interest rates, lower economic activity and higher inflation. Therefore, the name exchange-rate stagflation seems to characterize the essence of the phenomenon. A stylized model, due to Caballero and Krishnamurthy [2002], was used to explain the events. The main characteristic of the model is that domestic investment depends on the aggregate international liquidity of the economy, which is a limiting factor. During a liquidity crisis, the amount of liquidity is reduced, and the economy falls in recession. Neither the fiscal authority nor the monetary authority can reflate the economy by increasing government expenditures or the money supply. The bulk of the difficulties Brazil is currently facing derives from the uncertainty associated with the course of the future economic policy to be followed by the new administration, and to the sustainability of the public debt. To avert a painful default, real interest rates must fall and sustained growth must resume. To increase the chances of success, several policy measures are suggested: · To increase the exportability of the economy; · To increase the fiscal effort, in order to help dispel the doubts over the sustainability of the public debt; · To increase the credibility of the monetary authority, by conferring instrument independence to the Brazilian Central Bank; and · To resume the debt management efforts to lengthen the debt profile while reducing the indexation to the exchange rate and to the Selic short term rate, by making larger user of inflation-linked bonds. When and if the current international liquidity crisis is overcome, the above measures will help Brazil to lower the real interest rates and achieve sustained growth.

Balance Sheet Effects in Currency Crises: Evidence from Brazil

"Third-generation currency crises models" argue that capital losses from exchange-rate depreciation propagate the crises to the productive sector. To test these models, we use a firm-level dataset that allows us to measure currency mismatches around the 2002 Brazilian currency crisis. We find that, between 2001 and 2003, firms that shortly before the crisis had large currency mismatches decreased their investment rates by 8.1 percentual points, relatively to other public firms. Moreover, we show that the currency depreciation implied large competitive gains for the exporters, and yet the investment of exporters with large currency mismatches fell by 12.5 percentual points, relatively to other exporters. The estimated falls in investment are economically very relevant, thereby corroborating the relevance of third generation models negative balance sheet effects.

Maximum occlusal force and medial mandibular flexure in relation to vertical facial pattern: a cross-sectional study

BACKGROUND: Vertical facial pattern may be related to the direction of pull of the masticatory muscles, yet its effect on occlusal force and elastic deformation of the mandible still is unclear. This study tested whether the variation in vertical facial pattern is related to the variation in maximum occlusal force (MOF) and medial mandibular flexure (MMF) in 51 fully-dentate adults. METHODS: Data from cephalometric analysis according to the method of Ricketts were used to divide the subjects into three groups: Dolichofacial (n = 6), Mesofacial (n = 10) and Brachyfacial (n = 35). Bilateral MOF was measured using a cross-arch force transducer placed in the first molar region. For MMF, impressions of the mandibular occlusal surface were made in rest (R) and in maximum opening (O) positions. The impressions were scanned, and reference points were selected on the occlusal surface of the contralateral first molars. MMF was calculated by subtracting the intermolar distance in O from the intermolar distance in R. Data were analysed by ANCOVA (fixed factors: facial pattern, sex; covariate: body mass index (BMI); alpha = 0.05). RESULTS: No significant difference of MOF or MMF was found among the three facial patterns (P = 0.62 and P = 0.72, respectively). BMI was not a significant covariate for MOF or MMF (P > 0.05). Sex was a significant factor only for MOF (P = 0.007); males had higher MOF values than females. CONCLUSION: These results suggest that MOF and MMF did not vary as a function of vertical facial pattern in this Brazilian sample

FSR 1716: A New Milky Way Globular Cluster Confirmed Using VVV RR Lyrae Stars

We use deep multi-epoch near-IR images of the VISTA Variables in the Vía Láctea (VVV) Survey to search for RR Lyrae stars toward the Southern Galactic plane. Here, we report the discovery of a group of RR Lyrae stars close together in VVV tile d025. Inspection of the VVV images and PSF photometry reveals that most of these stars are likely to belong to a globular cluster that matches the position of the previously known star cluster FSR 1716. The stellar density map of the field yields a >100? detection for this candidate globular cluster that is centered at equatorial coordinates R.A. J2000 = 16:10:30.0, decl. J2000 = ?53:44:56 and galactic coordinates l = 329.77812, b = ?1.59227. The color–magnitude diagram of this object reveals a well-populated red giant branch, with a prominent red clump at K s = 13.35 ± 0.05, and J ? K s = 1.30 ± 0.05. We present the cluster RR Lyrae positions, magnitudes, colors, periods, and amplitudes. The presence of RR Lyrae indicates an old globular cluster, with an age >10 Gyr. We classify this object as an Oosterhoff type I globular cluster, based on the mean period of its RR Lyrae type ab, $\langle P\rangle =0.540$ days, and argue that this is a relatively metal-poor cluster with [Fe/H] = ?1.5 ± 0.4 dex. The mean extinction and reddening for this cluster are ${A}_{{K}_{s}}=0.38\pm 0.02$ and E(J ? K s ) = 0.72 ± 0.02 mag, respectively, as measured from the RR Lyrae colors and the near-IR color–magnitude diagram. We also measure the cluster distance using the RR Lyrae type ab stars. The cluster mean distance modulus is (m ? M)0 = 14.38 ± 0.03 mag, implying a distance D = 7.5 ± 0.2 kpc and a Galactocentric distance R G = 4.3 kpc