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Inflation, structural change and conflict in post-disinflation Brazil: a structuralist appraisal

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  • André Roncaglia de Carvalho

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Abstract

The paper analyzes some of the structural causes of inflationary persistence in Brazil in the post-Real plan period, in contrast to the Brazilian Central Bank’s view on the causes of inflation, particularly in what concerns its inertial component. It begins with a historical perspective on the convergence of stabilization theory to the so-called “macroeconomic consensus” and the understanding of inflation by this approach. We make the case that inflation can be better understood in its root causes only if the terms of distributional conflict and inter-sectoral dynamics are considered, which include the structural changes undergone by the Brazilian economy after the Real plan. Two primary pressures are therefore analyzed, namely: (i) the increase in the tertiary sector´s share of total value added in aggregate output combined with (ii) an intensive policy of income distribution. The interplay of supply and demand forces in a widely-indexed economic environment paints a more detailed picture of the current challenges faced by the ongoing monetary policy regime in Brazil than the one found in new Keynesian models.

Suggested Citation

  • André Roncaglia de Carvalho, 2013. "Inflation, structural change and conflict in post-disinflation Brazil: a structuralist appraisal," Working Papers, Department of Economics 2013_25, University of São Paulo (FEA-USP).
  • Handle: RePEc:spa:wpaper:2013wpecon25
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    References listed on IDEAS

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    More about this item

    Keywords

    inflation inertia; structural change; conflicting claims; Real plan; Brazil;

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General

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