Answering the question of why Brazil has relatively high real interest rates cannot be done in isolation by focusing exclusively on Brazilian data. Doing so would lead us to conclude that Brazilian real interest rates are actually very low at the moment. We are interested not only in why interest rates have declined but why, at any point in time, they were considerably higher than in other countries and what factors may help Brazil converge to the level of other emerging markets. To this end, the analysis in this paper is based on a panel data set of 15 emerging.
