Monetary reform, general indexation and the stabilization plan
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