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Inflation and stabilization in Brazil: a political economy analysis

Author

Listed:
  • Alfredo Saad-Filho

    (Department of Development Studies, SOAS, University of London, Thornhaugh Street, Russell Square, London WCJ OXG, UK; Tel.: +44-20-7898-4504; fax: +44-20-7898-4519 as59@soas.ac.uk)

  • Maria de Lourdes R. Mollo

    (Departamento de Economia, Universidade de Brasilia, Brasilia D.F, Brazil mlmollo@unb.br)

Abstract

This article outlines a political economy analysis of Brazilian high inflation and stabilization. The paper explains the distributive and monetary aspects of inflation and the gradual fragmentation of the Brazilian currency. It also reviews the most important aspects of the Real stabilization plan, the de-indexation of the economy, and its rapid "liberalization" and "internationalization." The paper shows that, in spite of the successful reduction of inflation, the Real plan was highly vulnerable to shifts in international liquidity; partly for these reasons, it led to de-industrialization and high unemployment. In addition to this, the Real plan contributed to an increase in income inequality and the development of sharp social conflicts in Brazil. These weaknesses were the main factors responsible for the currency crisis in January 1999.

Suggested Citation

  • Alfredo Saad-Filho & Maria de Lourdes R. Mollo, 2002. "Inflation and stabilization in Brazil: a political economy analysis," Review of Radical Political Economics, Union for Radical Political Economics, vol. 34(2), pages 109-135, June.
    • Handle: RePEc:sae:reorpe:v:34:y:2002:i:2:p:109-135
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    Citations

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    Cited by:

    1. Thomas Marois, 2014. "Historical Precedents, Contemporary Manifestations," Review of Radical Political Economics, Union for Radical Political Economics, vol. 46(3), pages 308-330, September.
    2. Mateo Tomé, Juan Pablo, 2014. "The accumulation of capital and economic growth in Brazil. A long-term perspective (1950-2008)," Economics Discussion Papers 2014-3, School of Economics, Kingston University London, revised 04 Mar 2015.
    3. Matias Vernengo, 2008. "The Political Economy of Monetary Institutions in Brazil: The Limits of the Inflation-targeting Strategy, 1999-2005," Review of Political Economy, Taylor & Francis Journals, vol. 20(1), pages 95-110.
    4. Ilias Alami, 2019. "Post-Crisis Capital Controls in Developing and Emerging Countries: Regaining Policy Space? A Historical Materialist Engagement," Review of Radical Political Economics, Union for Radical Political Economics, vol. 51(4), pages 629-649, December.
    5. Fernandes, Leonardo H.S. & Araújo, Fernando H.A. & Silva, Igor E.M. & Leite, Urbanno P.S. & de Lima, Neílson F. & Stosic, Tatijana & Ferreira, Tiago A.E., 2020. "Multifractal behavior in the dynamics of Brazilian inflation indices," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 550(C).
    6. Antonio Carneiro de Almeida Júnior, 2023. "Currency Crisis or Overproduction? A Marxian Analysis of the Exchange Rate Peg Collapse in Brazil," Review of Radical Political Economics, Union for Radical Political Economics, vol. 55(3), pages 466-489, September.
    7. Juan Pablo Mateo, 2018. "The Accumulation of Capital and Economic Growth in Brazil: A Long-Term Perspective (1950–2008)," Review of Radical Political Economics, Union for Radical Political Economics, vol. 50(2), pages 370-391, June.

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