Can Jurisdictional Uncertainty and Capital Controls Explain the High Level of Real Interest Rates in Brazil?
Interest rates are higher in Brazil than in other emerging countries. This paper aims to shed light on the possible reasons for this. We use many methods to compare the real interest rates in Brazil and other countries: (i) extracting the equilibrium interest rate from IS curves (ii) extracting the steady state interest rate from marginal product of capital and (iii) capturing relevant variables and the fixed effects having the real interest rate as dependent variable in a panel.