Brazil's Tropical Plan
22 Pages Posted: 5 Jan 2002 Last revised: 10 Nov 2022
Date Written: February 1987
Abstract
This paper highlights the institutional features of the inflation process and contrasts two stabilization efforts in 1964-66 and in 1986.The inflation process in Brazil is highly institutional. It does not resemble hyperinflations where pricing and wage setting are geared to the exchange rate by the hour, making it possible to stop inflation by simply containing money creation and fixing the exchange rate. The two stabilization programs demonstrate that an incomes policy is an essential ingredient to non-recessionary stabilization. But they also show that demand restraint is inevitable if disinflation is to be viable. The 1964 program was gradualist and two-handed, relying on the supply side on wage repression. The 1986 plan was a heterodox shock treatment centered around an uncompromising price freeze and paying insufficient attention to the need for fiscal restraint.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Modern Hyper- and High Inflations
By Stanley Fischer, Ratna Sahay, ...
-
Modern Hyper- and High Inflations
By Ratna Sahay, Carlos A. Vegh, ...
-
Stopping High Inflation: An Analytical Overview
By Carlos Végh
-
Stabilization with Exchange Rate Management Under Uncertainty
By Allan Drazen and Elhanan Helpman
-
Supply-Side Effects of Disinflation Programs
By Jorge Roldós
-
Disinflation and the Recession-Now-Versus-Recession-Later Hypothesis: Evidence from Uruguay
-
Inflationary Consequences of Anticipated Macroeconomic Policies
By Allan Drazen and Elhanan Helpman
-
Devaluation Risk and the Syndrome of Exchange-Rate-Based Stabilizations
By Enrique G. Mendoza and Martín Uribe
-
By Luis Catão and Marco E. Terrones
-
Domestic and Foreign Disturbances in an Optimizing Model of Exchange- Rate Determination