Vol. 15 No. 2 (1995): Apr-Jun / 1995

Vol. 15 No. 2 (1995)

Apr-Jun / 1995
Published April 1, 1995


The invention of underdevelopment
Celso Furtado
Brazilian Journal of Political Economy

The author recalls the development theory to illustrate the notable differences between the patterns and results of capitalist accumulation in central and peripheral regions. While in the former the result was an increase in wages and quality of life, he concludes that in the peripheral regions there has been an upsurge in social inequalities and patterns of domination, in order to, based on these reflections, establish the concept of underdevelopment and reflect ways of overcoming it.


The political origin of economic problems
Luiz Carlos Bresser-Pereira, Yoshiaki Nakano
Brazilian Journal of Political Economy

This paper presents S0 conveyed idea nowadays that the economic problems have a political origin, or that the economic problems have not been solved because of lack of political support. We show how the acceptation of these ideas is related to the appearance of the School of Public Choice, or School of National Choice — an analysis of a neoliberal character — and the called political macroeconomics. We discuss how these approaches lead to the proposition of adopting compensatory social policies which may guarantee the government legitimacy.


Brazilian inflation and the Real plan
Jeffrey Sachs, Álvaro Zini Jr.
Brazilian Journal of Political Economy

By most standards, Brazilian inflation has been the most intractable in world history. The time span of high Brazilian inflation is unparalleled: inflation has exceeded 50 percent per annum every year since 1979, and has been at double digit rates every year since 1957. Even Argentina, the perennial rival of Brazil for the dubious distinction or longest-running high inflation, has achieved price stabilization since April 1991. There have been innumerable major and minor attempts at Brazilian stabilization, including at least five major “Plans” since 1986. Each has failed. Brazil is currently in the midst of another major stabilization attempt, the Plan Real. This paper assesses the difficulties inherent in Brazilian stabilization programs, and the prospects for the Plan Real, including its particular motivations and its chances for success.


Unit roots, economic fluctuations and the "persistence" of shocks
João Marcus Marinho Nunes
Brazilian Journal of Political Economy

The relative importance of different shocks on the level of economic activity has been a hot subject of research over the last 25 years. The traditional view, retained by Keynesians and Monetarists alike, is that shocks to aggregate demand are the impulses to economic fluctuations, a phenomenon independent of growth. A succession of real shocks and technological transformations gave rise to what is known as Real Business Cycle Theory. Proponents of real business cycles do not consider growth separately from fluctuations and seek to explain economic fluctuations abstracting from monetary considerations. This paper reviews the empirical evidence on the permanence of shocks. Although much can be said for the interdependence between growth and fluctuations it also concludes, contrary to the RBC view, that economic policy is important in generating an environment conducive to growth.


The payment of the internal public debt
Fabio Giambiagi
Brazilian Journal of Political Economy

This paper proposes a change in public debt policy, based on the placement of new bonds with maturities between 1 and 30 years. By modifying the conditions of a similar proposal presented by Giambiagi and Zini, it is shown that if all the internal public debt were transformed into a debt of 7 years, paid through a monthly fix payment, with an interest rate of 12% in US$ and a clause for payment in foreign currency, the primary surplus of the Federal Government required for internal public debt service and payments of interest on external public debt could, under certain conditions, be less than 2.5% of GDP. Afterwards, some parameters are changed in order to present a menu of alternatives, which imply a more rapid payment and require a higher primary surplus in the first year. It is concluded that, with a fiscal effort of around 2.0% of GDP related to the data of 1993, Brazil could adopt a stabilization plan with a fiscal and monetary toughness very similar to that of the Convertibility Plan adopted in Argentina in 1991.



Agathotopy: freedom, equality and efficiency
Eduardo Matarazzo Suplicy
Brazilian Journal of Political Economy

The article tells about the travel made in 1988 by the Nobel laureate economist James Edward Meade to the island of Utopia, a Perfect Place to live in. After much effort, he could find the island Nowhere. However, on his way borne, he found the island of Agathotopia, a Good Place for people who made no claim for perfection to live in. After studying the social arrangements of Agathotopia, Meade returned to his country convinced that those arrangements were the best to attain the objectives of Liberty, Equality and Efficiency. In Agathotopia there is much flexibility of prices and wages, a great deal of interaction and partnership between capital and labor and a social dividend or a guaranteed minimum income for all citizens. Meade has been proposing the social dividend since 1935, after interacting with many other economists who have contributing to the idea of a guaranteed minimum income or different forms of a negative income tax. The proposal is now being discussed by the Brazilian National Congress.



Knowledge in the wonderland of the market of ideas deconstructing the economics os science of Michael Polanyi
Gilberto Tadeu Lima
Brazilian Journal of Political Economy

This essay develops a deconstructive interpretation of some aspects of the economics of science formulated by Michael Polanyi. In particular, the essay analyzes the extent to which Polanyi's libertarian positions can be seen as consistent from a logical-deconstructive point of view. Although the essay highlights the existence of inconsistencies in Polanyi's discourse, his contribution to the debate about the specificities inherent to the knowledge process is equally emphasized. In other words, even though Polanyi has exaggerated his Panglossian belief in the efficiency of the spontaneous coordination of scientific activities promoted by the market, it is necessary to recognize that his positions regarding the characteristics of knowledge must be seen as an important antidote against naive proposals for centralization of scientific activities under a single authority.

Monetar policy, compulsory deposits and inflation
Márcio G. P. Garcia
Brazilian Journal of Political Economy

Since the outset of the Real Plan, the government has resorted to much higher reserve requirements on bank’s liabilities, as well as to the creation of reserve requirements on credit (a bank’s asset) in the attempt to restrict the expansion of monetary aggregates and credit. The policy intention was right, although the design of the reserve requirements profile—i.e., the relative structure of the reserve require-ments on the different bank’s liabilities—was flawed. This is because there is a very high (initially a 100% marginal) reserve requirement on demand deposits, which is the liability that typically grows the most when high inflations subside. Since the beginning of 1995, tax changes made profitable to transfer even very short-term funds from demand deposits to short term mutual funds. Furthermore, when such transfer is undertaken, the overall reserve requirement falls substantially. The main policy recommendation is to use both the reserve requirements’ profile and the tax structure so that the aggregate financial wealth is distributed among its several components in a way compatible with low inflation. This will avoid future reallocations of portfolio, thereby increasing the efficacy of monetary policy.

Reserve requirement; monetary policy; stabilization; inflation.


Currency Board: what is and how does it work?
Aluizio A. de Barros
Brazilian Journal of Political Economy

This paper examines the experiences in the operation of a currency board in North Russia, Hong Kong and Estonia, and discusses its implementation in Brazil.

Monetary system; monetary policy; money supply



Mexico and the exchange rate
André Lara Resende, Adward J. Amadeo, Affonso Celso Pastore, Maria Cristina Pinotti, João Sayad, Luiz Carlos Bresser-Pereira
Brazilian Journal of Political Economy

A crise financeira do México em dezembro de 1994 provocou uma série de análises, de um lado sobre a própria crise, de outro, sobre a política cambial brasileira e a consolidação do Plano Real. Apresentamos abaixo, como documento, alguns dos principais artigos publicados nos jornais.


Central Bank tenure
Pérsio Arida
Brazilian Journal of Political Economy

O economista Pérsio Arida assumiu a presidência do Banco Central no dia 10 de janeiro de 1995. Nessa data, proferiu o discurso abaixo.