Graphical interpretation of adjustment program costs
Abstract
This work is based on a Bresser-Pereira’s paper, in which he proposes to represent
the liquid costs of an economic adjustment applied upon a country. For that study he
used a graphic tool. Generally speaking, we may say that there are two situations: the first
one occurs when the country ‘s government decides to apply the adjustments and reforms
as soon as distortions appear. The second one happens when the government, in spite of the
evidences, muddling through reforms, waits for a society consensus. To illustrate this two
different cases, Mexico and Argentina were chosen. Although the graphic tried to show the
transitional costs of adjustment, it is possible to deduce other interesting things – basis of
this work.
JEL Classification: E31.
Keywords: Stabilization inflation