This article develops arguments in favor of recomposing the time to maturity ofthe domestic public bond’s debt and present calculations on the amount of tax required by different terms of payment of that debt, assuming that it is rescheduled. Two alternatives are presented and evaluated. Alternative one offers a collateral for the principal owed and calculates the flow of interest in relation to GDP during the repayment period. Alternative two is based on making gradual and small down-payments to repay the old debt within a new institutional framework. The interest rate in the two cases would fluctuate and be readjusted each semester. Both alternatives yield a substantial alleviation of the interest burden compared to the present policy. The main conclusion is that with a dollar long-term interest rate similar to the ones observed in the international markets (about 8% a year) plus 2% of country risk and a 3% a year GDP growth rate, the domestic public debt could be paid in 20 years if a yearly provision of only 0.7% of GDP is allocated to its payment. The calculations also show that the required primary budget surplus would decrease to the range of 2.1 % to 2.7% of GDP, facilitating the balancing of the budget.

The paper discusses the issues involved in three different varieties of stabilization plans: gradualism, dollarization, and social pacts. It is argued that the efficiency of each alternative depends upon special conditions pertaining, by and large to the dynamics of price fixing in the Brazilian economy. Shock alternatives in particular, namely, price freezes or pre-fixing schemes, are said to have their usefulness attached to “backwards looking” price fixing behavior. Gradual strategies, on the other hand, especially when unambiguously orthodox, are said to be more efficient when “forward looking” behavior is adopted by price setters. The paper also discusses the conditions for the application of an Argentinean type dollarization in Brazil and also institutional peculiarities affecting the feasibility of “social pacts” in Brazil.

The aim of this essay isto examine the 1986-91 Brazilian inflationary process. This essay wiIl take the broadest analytical une, considering the inflationary process resulting from the evolutionary dynamics of the elements that affect the aggregate supply and demand. Regarding the aggregate demand shifts we emphasize the relationships between fiscal and monetary policies. We stresscd that the impact of public sector deficit has been seen much more as a financing problem rather than the result of its leveis. Regarding costs we emphasize the role of the relative price of competitive sectors that are more important in determining real wages and those of the oligopolistic sector. Our study seems to suggest that the causes of Brazilian inflationary process are many and com plex and their solution do not depend solely upon the squeeze of the public sector deficit.

Keynes assumed inelasticity of supply (or inelasticity of production) with respect to demand as a necessary attribute of money. But the post-keynesian theory of money suggests that the money supply function should be viewed as horizontal, at a level of interest rates established by the central bank in setting the supply price of reserves. Interest rates rather than the money supply are the central bank’s true exogenous control variable. The money supply is endogenous, credit-driven and demand-determined. This paper examines why the later theory surpass Keynes’s theory of money.

The paper analyses the Brazilian size distribution of income with the objective of identifying to what extent economic policies, macroeconomic performance and changes in the structure of the labor force are related to inequality. There is evidence of long term increases in inequality, especially between 1960 and 1970. Long term trends do not seem to be affected by economic performance, although the stagnation of the 1980s has led to absolute income losses for all individuals except those in the top percentile. Short term behavior, on the other hand, seems to have been influenced by economic performance: there is evidence that growth enhances equity, whereas high inflation has the opposite effect. A decomposition analysis highlights the importance of education in explaining inequality, but points to changes in the structure of the labor force as the major factor in accounting for changes in inequality since the mid-1970s.

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