Monetary reform, general indexation and the stabilization plan

Vol. 14 No. 2 (1994)

Apr-Jun / 1994
Published April 1, 1994
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Carvalho, Fernando J. Cardim de. 1994. “Monetary Reform, General Indexation and the Stabilization Plan”. Brazilian Journal of Political Economy 14 (2):282-87.

Monetary reform, general indexation and the stabilization plan

Fernando J. Cardim de Carvalho
Do Departamento de Economia da Universidade Federal de Pernambuco – UFPE, Recife/PE, Brasil.
Brazilian Journal of Political Economy, Vol. 14 No. 2 (1994), Apr-Jun / 1994, Pages 282-287


The FHC Stabilization Plan consists of three stages, one of which is a monetary
reform where a new money-of-account is initially created as the basis for a new money
proper to be issued later to replace the cruzeiro real. The paper explores the differences
between indexation and monetary reform in the light of the distributive inconsistencies
generated by a high inflation regime. It is shown that the possibility of explosive solutions
to the coordination problem during the transition for new money is much increased by the
rules proposed by the government.

JEL Classification: E31.

Keywords: Stabilization inflation Real Plan