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Macroeconomic Performance and Inequality: Brazil 1983-1994

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  • Manoel Bittencourt

Abstract

We examine how poor macroeconomic performance, mainly in the role of high rates of inflation, affected earnings inequality in the 1980s and early 1990s in Brazil. The results based initially on aggregate time-series, and then on the relatively novel sub-national panel time-series data and analysis show that the extreme inflation, combined with an imperfect process of financial adaptation and an incomplete indexation coverage, had a regressive and significant impact on inequality. The implication of the results is that sound macroeconomic policies, which keep inflation low and stable in the long-run, should be a necessary first step of any policy package implemented to alleviate inequality in Brazil.

Suggested Citation

  • Manoel Bittencourt, 2008. "Macroeconomic Performance and Inequality: Brazil 1983-1994," Working Papers 101, Economic Research Southern Africa.
  • Handle: RePEc:rza:wpaper:101
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    Keywords

    Inequality; in‡ation; indexation; …nancial adaptation; Brazil;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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