This case describes Brazil's political and economic evolution from the end of WWII to October 1998, focusing on the policies and effects of the Real Plan, an economic stabilization plan implemented between 1994 and 1998. Contagion effects of the Russian Crisis in August 1998 led to massive capital outflows from Brazil and put pressure on foreign exchange reserves. Brazil needs to decide what actions to take with respect to its system of fixed exchange rates. See also the B case (UVA-BP-0430) and C case (UVA-BP-0431).
This case allows for an analysis of the causes and consequences of inflation in a developing country, an analysis of the elements of a successful macroeconomic stabilization plan, and an analysis of the causes and policy responses to a balance of payments crisis in a system of fixed exchange rates. This case series can be used in classes on international economics, international business, or international financial markets.