Abstract

This article is a survey about the consequences of the credibility of government
policies, one of the main developments in macroeconomic theory in the 80s. New classical
economists used it to explain why, in the long-run, government policies fail when they intend
to increase the level of employment above the natural rate. Even in the short run, they
only achieve their aims if it is possible to cheat the private sector. The result will be to lose
credibility and inflationary pressures. Other authors developed it as a tool to understand
the relationship between government, political parties and pressure groups with economic
policy. Finally, we comment some papers about the Brazilian inflation based on distributive
conflict and compare them with explanations from credibility of policies.

JEL Classification: E31; E52.