EFFECTS OF THE "PLANO REAL" ON THE RIO GRANDE DO SUL'S ECONOMY: EXPORTS, OUTPUT AND PUBLIC FINANCE IN THE FIRST TWO YEARS OF THE "REAL"

Abstract

The main idea of this paper is to analyse the impacts of the economic policy implemented in the first two years of the Piano Real on the economy of Rio Grande do Sul. We shall concentrate on the effects of Piano Real on three basic aspects of Rio Grande do Sul's economy: exports, output and public finance. The prices stabilisation effort, that was mainly based on the valorisation of the real exchange rate and on the reduction of agriculture prices, punished severely state of Rio Grande do Sul, which economy relies mainly on agriculture products and exports. On the other hand, the reduction of inflation rate was responsible for the increase on the state public deficit, due to high weight of the pay roll on the state budget.