Vol. 13 No. 4 (1993): Oct-Dec / 1993

Vol. 13 No. 4 (1993)

Oct-Dec / 1993
Published October 1, 1993


Hyperinflation and stabilization
Fernando de Holanda Barbosa
Brazilian Journal of Political Economy

Brazil is undergoing hyperinflation, even though the currency is not dead yet.
But for any plan on inflation and stabilization to work, one must acknowledge that the process
is hyperinflationary, not just inflationary This paper presents a series of possible ways to
overcome this situation, including the need for a permanent fiscal adjustment.

JEL Classification: E31.

Stabilization in an adverse environment: the 1987 Brazilian experience
Luiz Carlos Bresser-Pereira
Brazilian Journal of Political Economy

This paper is both a first-hand account of the stabilization programs that Brazil
tried during the mid-to-late-1980s to combat inflation and considerations regarding how to
promote efficient reforms. The main concern is how economic policy is not separated from
political processes and that only with political support it is possible to achieve the necessary

JEL Classification: E31; D72.

Brazilian coffee: no to a new international agreement
Fernando Homem de Melo
Brazilian Journal of Political Economy

Four years after the breakdown of the International Coffee Agreement this paper is an attempt to evaluate the position of the Brazilian government. Brazil was, in 1989, the country very much against the renewal of the agreement. To do that an examination was made of the empirical evidence during the last thirty years. Such evidence showed losses in Brazil’s coffee production, exports and market share. In practice, Brazil was the only country to carry the burden of the coffee agreement. The other countries profited at Brazil’s costs. It is also shown the large comparative advantage of coffee production in Brazil and that adjustments should be made in domestic policies.

JEL Classification: L66; Q17.

The diffusion of political economy in Brazil between the late 18th and early 19th centuries
Antonio Penalves Rocha
Brazilian Journal of Political Economy

Political Economy began to be known by Brazilian intellectuals by the end of
the 18th and the beginning of the 19th century. During this colonial period, Brazil went
through a series of changes brought about by the transfer of the Portuguese Royal Family
to Rio de Janeiro. These changes affected Political Economy which began to be developed
within the government and acquired different characteristics than those of European Political
Economy of the same time. This article presents data related to this diffusion, the absortion
of Political Economy by the State and to examine the specificity it takes up in Brazil as
a consequence of the role the Portuguese government gives to it.

JEL Classification: B12; N46.

Trade liberalization, distribution and employment
Edward J. Amadeo, José Márcio Camargo
Brazilian Journal of Political Economy

The paper approaches aspects of the political economy of trade liberalization. It
examines the reasons for the establishment of protectionist practices, the social costs of such
practices and the relation between distributive conflicts and protectionism, emphasizing the
formation of distributive coalitions. We apply these concepts and ideas to the Brazilian case
in order to examine the distributive effects of the protectionist structure which prevailed
until the late 1980’s and the potential changes over the 1990’s. Finally, we develop a macroeconomic
model to explore the effects of liberalization on the functional distribution of
income and aggregate demand.

JEL Classification: F14; F16; F43; D72.

Immigrants, skilled labor and industrialization: Rio and São Paulo in the beginning of the century
Flávio Rabelo Versiani
Brazilian Journal of Political Economy

The article examines the labor supply conditions for the industrial sector in Rio de Janeiro City and São Paulo state in the first two decades of this century, during which period São Paulo surpassed Rio as the leading industrial area of Brazil. It is shown that São Paulo had a comparative advantage over Rio in labor costs; the rural-urban wage differential. It is argued that this advantage can be related to the larger presence of immigrant workers in São Paulo industry; the ample supply of immigrant labor is thus seen as a major cause of the relative growth of São Paulo industrial production, in the period.

JEL Classification: J24; J61; N16; N36.

A proposal of to extend the United Nations “Human Development Index”
Maurício Costa Romão
Brazilian Journal of Political Economy

In spite the considerable advance made to the literature on development by the
recent United Nations attempt to measuring “human development”, this paper argues that,
especially in the context of developing countries, where poverty and inequality are of substantial
order, these two dimensions should be integrated and added to the index proposed by
that organism. This is accomplished by a new measure that simultaneously take into account
indices of poverty, income distribution and human development. Empirical results show that
the extension suggested is important and more appropriate for policy purposes.

JEL Classification: O15; I32.

Cyclical variations of earnings inequality in Brazil
Eliana Cardoso
Brazilian Journal of Political Economy

This paper shows that income distribution can change dramatically during the
business cycle. This finding contrasts with the widespread belief that income distribution
changes slowly in the absence of wars and revolutions. Macroeconomics explains in good
measure short-run variations in income distribution: inequality varies cyclically, and it increases
with inflation and unemployment. Furthermore, at least in Brazil, the minimum wage
legislation does not contribute to a better income distribution. There is also evidence that
populist policies which lead to real appreciation cannot be justified as supporting the poor.
Thus, the best way to help the poor is demonstrably not through the manipulation of prices
and wages, but probably through macro stability and a transparent tax-transfer system.

JEL Classification: I32; O15.

Keynes's monetary theory: a partial survey
Victoria Chick
Brazilian Journal of Political Economy

The title of the paper alerts the reader to the fact that while the role of money
in Keynes’s earlier work is alluded to, it is mostly the monetary contribution of the General
Theory (to which the author is particularly partial) which is surveyed here. The General
Theory represents a breakthrough in monetary theory both broadly and narrowly defined.
Money in the General Theory is all-pervasive. It is essential in the sense of Radner and
Hahn. Money is also essential in allowing Keynes to break away, more profoundly than
before, from equilibrium economics. Monetary theory narrowly defined also represents a
breakthrough: speculative demand is a revolutionary concept, driving a wedge between the
rate of interest and the rate of profit. The concept is elaborated and compared with Hicks’s
treatment. The article ends with a brief section on the finance motive and endogenous money.

JEL Classification: E52; B21; B31.


Inflation and credibility: an introduction with bibliography
Sérgio Ribeiro da Costa Werlang
Brazilian Journal of Political Economy

The paper is an informal survey of the modem theory of political macroeconomics.
It provides a selected bibliography and should be of use to the non-initiated in the
field. The topics of credibility, reputation building, and time consistency are introduced and
discussed in detail.

JEL Classification: E60; P16; D72.

The vicissitudes of budgeting
José Serra
Brazilian Journal of Political Economy

The purpose of this paper is to appraise the application of new regulations of
Constitution about budgeting. This appraisal is carried out in the critical situation of Brazilian
public finance and takes into consideration the positive effects on the control of public
expenditure that should be produced with the full implementation of new constitutional
directives. The appraisal concludes that some constitutional determinations have not been
regulated yet. This fact has permitted serious offenses against the Constitution and has facilitated
Congress and the Government administration in casuistic actions regarding budgeting
affairs. At the end of the paper some measures are presented which must be implemented
in order to obtain better efficiency and efficacy in the allocation of public funds, through
introducing improvements in the budgeting process.

JEL Classification: E62; H11; D72.