Vol. 29 No. 4 (2009): Oct-Dec / 2009

Vol. 29 No. 4 (2009)

Oct-Dec / 2009
Published October 1, 2009


Can future systemic financial risks be quantified? Ergodic vs nonergodic stochastic processes
Paul Davidson
Brazilian Journal of Political Economy

Different axioms underlie efficient market theory and Keynes’s liquidity preference theory. Efficient market theory assumes the ergodic axiom. Consequently, today’s decision makers can calculate with actuarial precision the future value of all possible outcomes resulting from today’s decisions. Since in an efficient market world decision makers “know” their intertemporal budget constraints, decision makers never default on a loan, i.e., systemic defaults, insolvencies, and bankruptcies are impossible. Keynes liquidity preference theory rejects the ergodic axiom. The future is ontologically uncertain. Accordingly systemic defaults and insolvencies can occur but can never be predicted in advance.

JEL Classification: G1; D80; E1.

The Global Crisis and the Implications for Developing Countries and the BRICs
Jan Kregel
Brazilian Journal of Political Economy

Developing countries experienced high growth and low inflation in the new Millennium. This has been due in part to the impact of the expansion in developed country financial markets on demand for exports. Especially positive has been the performance of the so-called BRICs - Brazil, Russia, India and China. The collapse of the financial markets will eliminate the positive impact of export-led growth. An alternative strategy will be required. One possibility is to build on domestic sources of demand. Brazil is well-placed to engage in such a strategy and already has a number of policies to support this alternative. They should be introduced rapidly.

JEL  Classification: O11; O16; O23; O24; O10; O19.

Determinants of the recovery of formal employment in Brazil: evidence for the period 2001/2005 and hypotheses for a research agenda
José Celso Cardoso Junior
Brazilian Journal of Political Economy

Decisive factors affecting the recent increase in formal employment in Brazil. This paper gives a general overview of the evolution of labour market indicators between 1995 and 2005 in Brazil. It shows an overall increase in formal employment rates from 2001 to 2005, as opposite to what had happened from 1995 to 1999. It is argued that such recent trends might indicate the reconfiguration of the labour market in better terms, with potential positive consequences to the finance performance of the Social Security sector. The paper also examines some of the major factors associated with this new trend and their chances to maintain such tendency in the near future. It's important to notice that all of them may be subject to some kind of political management by the State. In other words, we suggest that there are suficient instruments and operative skills in the Brazilian State to make these and others factors work in favour of a more persistent strategy of development with social inclusion through labour.

JEL Classification: J; J2; J23.

Development and inequalities
Pierre Salama
Brazilian Journal of Political Economy

The rise in wages inequalities, whatever may be the level of development reached, is linked to the modernization of countries, a modernization percieved as a constraint in an ever more globalised world. This tendency is sometimes thwarted by sustained education policies and by restrictive government policies aiming at raising low wages. But as a tendency, it is stronger when countries increase their opening rate and modify the exports structures toward ever more sophisticated products. One can however see how much it is artificial to separate technology from exports in order to measure their respective weight on the rise of inequalities.

JEL Classification: O1; F16; F4; J31.

Wages, productivity and profits in the Brazilian industry, 1945-1978
Renato Perim Colistete
Brazilian Journal of Political Economy

Wages, productivity and profits in the Brazilian manufacturing industry, 1945-1978. This article investigates the distribution between profits and wages in Brazil’s manufacturing industry from 1945 to 1978. First, the article provides yearly series of average real wages and labour productivity, from which labour unit costs and the distribution between profits and wages in the manufacturing industry are estimated. Second, the article addresses the behaviour of wages, labour productivity and industrial income distribution in the context of variable economic, political and institutional conditions which prevailed in post-war Brazil. The results of the quantitative analysis allow us to assess both the trends and the yearly behaviour of the manufacturing income distribution during a key period of the Brazilian economic history.

JEL Classification: N36.

Recent performance of the Brazilian labor market: 1992-2005
Lauro Ramos
Brazilian Journal of Political Economy

This study aims at describing the behavior of the Brazilian labor market between 1992 and 2005. This period comprises significant changes in the economic scenario, in the midst of the process of opening the economy to adjust to the prevailing international economic order. In the one hand, the paper focuses on the time evolution of the main labor market indicators, trying to identify trends and stylized facts. On the other, it emphasizes aspects related to spatial patterns, particularly in terms of the metropolitan cersus non-metropolitan behavior.

JEL Classification: J21; J23; J24.

Social-environmental indicators: evolution and perspectives
José Eli da Veiga
Brazilian Journal of Political Economy

This article deals with the balance of sustainability indicators and/or sustainable development indicators. Major gaps and blocks - both conceptual and operational - still hinder the socio-environmental governance from avoiding “blind flights”.

JEL Classification: Q01.

Protectionism and industrialization: a critical assessment of the Latin American industrialization period
Noemi Levy-Orlik
Brazilian Journal of Political Economy

Protectionist policies were considered one of the pivotal features of the import industrialization process in Latin America. In this paper the effects of protectionist policies are assessed in terms of the principal macroeconomic variables, productive structure and external trade composition; also, ECLAC’s perspective on the import substitution process is discussed. The main conclusions are that regional protectionist policies were spontaneous, and their effects were limited due to the generalized protection that took place and the government’s commitment to price stability.

JEL classification: F11; F12; L1; L5; O11; O24; O14; O25.

Alternative educational policy for Brazil: School Accountability
Eduardo de Carvalho Andrade
Brazilian Journal of Political Economy

An alternative to the education policy in Brasil: School accountability. This paper examines the school accountability (SA) policies adopted in the US. Significant impacts on the quality of education occur when the SA incorporates a set of sanctions and rewards to schools based on their students’ performance. In comparison with other policies, it is also more efficient. Potential problems of adopting the SA (bias toward cognitive ability, gaming and difficulty in measuring the school contribution) can be overcome. The analysis suggests that the SA should be considered as an alternative to improve the quality of education in Brazil.

JEL Classification: I21; I28.


Public indebtedness, growth, currency and inflation: comment on “Pleasant Mathematics”, by Gerson Lima
Fabrício Leite, Gustavo Aggio, Eduardo Angeli
Brazilian Journal of Political Economy

The paper aims at analyzing the article by Gerson Lima on the manner by which fiscal deficit should be covered. It presents a more general dynamic model, where the principle of effective demand is explicitly used. By doing that, it is possible to treat as endogenous variables the national income and the government entries, what brings the result that the public debt must not follow an explosive path unless the very restrictive conditions of Lima's paper prevail. It also evaluates Lima's implicit inflation theory, and argues against his approximation to Friedman's framework.

JEL Classification: E5; E6.

Public indebtedness, growth, currency and inflation: comment on “nice math”, by Gerson Lima - the reply
Gerson Lima
Brazilian Journal of Political Economy

This paper aims at replying critical commentaries made by LEITE, F. P., AGGIO, G. O. e ANGELI, E. (this Review, 2009) on two Author’s theses. The first one states that, if public deficit is to be financed, then either interest rate applied is negative or government invests as if it where a profit-making business enterprise. Otherwise, public debt will mathematically follow an explosive trend. The second one says that if there is no debt and public deficit is paid with money issuing, then the monetary stock will tend to an equilibrium level.

JEL Classification: E5; E6.