Vol. 20 No. 1 (2000): Jan-Mar / 2000

Vol. 20 No. 1 (2000)

Jan-Mar / 2000
Published January 1, 2000


The Changing Role and Strategies of the IMF and the Perspectives for the Emerging Countries
Fernando J. Cardim de Carvalho
Brazilian Journal of Political Economy

The IMF was created right after World War II to manage an international payments
system based on fixed exchange rates. In its early years the Fund’s remedy to balance-
-of-payments crises consisted in reducing domestic aggregate demand. As a result, its policies
were seen as recessive. With the collapse of the fixed exchange rates system in the early 70s,
the Fund lost its clients in the developed world and turned to developing countries. In the
Fund’s approach, developing countries suffered crises not because of temporary maladjustments
between aggregate supply and demand but because of structural problems. Accordingly,
the Fund began to impose structural reforms as conditionalities for its loans, curbing
the autonomy of developing countries to adopt the policies they would see as favorable to

JEL Classification: F34; F62.

Foreign investment and competition
Aristides Almeida Filho
Brazilian Journal of Political Economy

At the international level, liberalization requires further mobility of technology
and labour than is currently available across countries. Apart from the international movements
of factors of production, this paper argues that the culture of liberalization needs to
be complemented by a competition culture able to tackle both the firm and the consumer
view. We start with definitions of Foreign Direct Investment (FDI) and contestability. Constraints
on FDI and competition policy are then examined. We stress that, to optimize the
benefits of FDI, critical variables should be taken into account. Finally, we conclude by stating
that there is no either/or between markets and State intervention.

JEL Classification: F21; F68.

Monetary policy in Argentina under convertibility, 1991-96
Aldo A. Arnaudo
Brazilian Journal of Political Economy

A conceptual framework to analyze monetary policy might be the relationship
“policy goal-operating target-monetary instrument.” Although the discretion of the monetary
authorities is severely restricted, this analysis is also applicable to Argentina since 1991. Its
monetary regime is governed by the Convertibility Law, which requires the Central Bank to
convert the domestic currency into dollars, and by the Central Bank Charter, which prescribes
that its “fundamental mission [...] is [...] to maintain the value of the currency.” Five
periods were found when the operating targets and monetary instruments were different,
while the policy goal of price stability remained unchanged.

JEL Classification: E52; F31.

European Monetary Union: Recent evolution and perspectives
Ricardo da Costa Nunes, Selene Peres Peres Nunes
Brazilian Journal of Political Economy

This paper discusses the uniqueness and the stability of the proposed model
for the European Monetary Union – EMU, pointing out some of the difficulties faced in its
implementation and the chances of surpassing them. It also suggests how all the points of
European monetary integration – central bank independence, balanced budget and stability
of the exchange rate within a certain band of fluctuation – are sustained upon the proposition
that economy founds auto-adjustment since there is flexibility of wages and prices
and the State’s intervention remains as short as possible. Thus, the need of convergence of
economic and financial EMU’s criterion and the sufficiency of its achievement to a greater
development of Europe in face of other countries bring the discussion back to the theoretical

JEL Classification: F45; F42; F33.

The impacts of the Euro: an evaluation
Mário Augusto Bertella
Brazilian Journal of Political Economy

The introduction of a single currency (euro), in the beginning of 1999, is a historical
event in the international monetary system. This paper evaluates some consequences
of this monetary union concerning the capital markets, performance of Europe, the threat of
the euro in relation to the US dollar as a store of value and possible source of instability in
the exchange markets.

JEL Classification: F45; F42; F33.

In Search of a Monetary Constitution for Brazil
Marcio Ronci
Brazilian Journal of Political Economy

The present paper examines various episodes of the monetary history of Brazil
and other countries as well as the recent empirical evidence to look into critically the
two principal proposals of monetary constitution for Brazil: currency board and independent
central bank proposals. We outline also a monetary constitution inspired in the Pandia?
Calo?geras’s Monetary Project (1926) with the only purpose of shedding light on the basic
principles involved in the design of a monetary constitution aimed at controlling the power
to create money and curbing inflation: (a) separation between the power to create money
and the agents that determine public expenditure; (b) a clear monetary rule to constraint the
power to create money; and (e) separation of the power to create money from the regulation
and supervision of banks.

JEL Classification: E51; E58; E42.

The New Government Tax Reform Proposal: Limits of the Possible and Uncertainties Involved
Rogério L. F. Werneck
Brazilian Journal of Political Economy

In late 1997, the Brazilian government announced the first version of a tax
reform contemplating a complete overhaul of the indirect taxation in the country. Turnover
taxes were to be eliminated and the entailing loss of revenue compensated by a new
federally coordinated broad-based VAT, that would replace the present incoherent state
VATs and the largely mismanaged service tax imposed by local-governments. In this article,
simulation models are used to study the consistency of the proposed reform and some of its
possible consequences. A risk analysis framework is used to underline the most important
uncertainties involved.

JEL Classification: E22; E21.

Reforming old-age pension systems in developing countries: lessons from Latin America
Ana Luiza Cortez Roncada
Brazilian Journal of Political Economy

Latin American countries, pioneered by Chile, have launched bold old age pension
reforms. While these reforms may address issues of financial sustainability of the pension
systems, their most valuable contribution is related to political economy aspects as
they avoid perverse redistribution within the system and minimise the risk of government
appropriation. On the negative side, Chilean inspired reforms represent a costly approach to
reform; they may lead to concentration within the industry and increase risks faced by the
individual. They do not eliminate evasion, and in some of its versions, they may introduce
problems of adverse selection. More importantly, such reforms do not guarantee that old
age will be free of poverty, which is (or should be) the main objective of a pension system.JEL

JEL Classification: J26; H55; J14.

Note on the Brazilian Social Security Reform in the context of neoliberalism and of Latin America
Rosa Maria Marques
Brazilian Journal of Political Economy

This paper has a double purpose. First, we intend to discuss what is in game
when the public social security is changed for private systems based on individual savings.
Second, we aim to analyze why the neoliberal reforms are accepted easier in the Latin American countries (with exception of Brazil) than in European ones.

JEL Classification: J26; H55; J14.

Notes on the capitalist process of calculus
Eduardo Strachman
Brazilian Journal of Political Economy

This paper analyses some important aspects that are considered in the capitalist
process of calculus used in the decisions of investment. The bases for this analysis are the
argumentation presented in the fifth chapter of the doctorate thesis of Si?lvia Possas (1993).
Some own reflections about these arguments and of distinguished Post-Keynesians are also
ser forth, for Possas neglected certain important points in the discussion she made in this
chapter that re-elaborates some reasonings of Keynes (1936) and of these Post-Keynesians.

JEL Classification: E12.

Influences and Contributions
Luiz Carlos Bresser-Pereira
Brazilian Journal of Political Economy

This is an intellectual self-profile. The author starts identifying the political and
theoretical influences he had, as a young man, from his family, and from intellectuals as
Marx, Weber and Keynes, abroad, and from Furtado and Rangel, in Brazil. He divides his
contributions in historical and theoretical. The historical analyses are, on their turn, subdivided
on the ones dealing specifically with Brazil and Latin America and the other referring to
changes in contemporary world economy and society. The theoretical contributions are the
ones rather of logical-deductive, or methodological, than of historical-inductive, character.
In the conclusion the author makes a general evaluation of the work done, that is also a
research program for the future.

JEL Classification: B2.