Vol. 8 No. 3 (1988): Jul-Sep / 1988

Vol. 8 No. 3 (1988)

Jul-Sep / 1988
Published July 1, 1988


The limits of economic policy
Luiz Carlos Bresser-Pereira
Brazilian Journal of Political Economy

Since World War II the importance of economic policy did not stop increasing.
Even conservative economists do not deny its relevance. But its economic and political limits
are very clear, beginning with a basic limit: the principle of rationality. The author discusses
these limits using his personal experience.

JEL Classification: H11.

The transformation of external debt into long-term bonds
Paulo Nogueira Batista Jr.
Brazilian Journal of Political Economy

This paper offers a discussion of the proposal of securitization of external debt
in the context of Brazilian economy. After analyzing many questions involved, the paper
presents a specific proposal of conversion of external debt into bonds with Iong term maturity
and fixed interest rate. This proposal should reduce the external transfer of real resources
and ecrease the outstanding of external debt and diminish the vulnerability of Brazilian
economy to an increase in the interest rate as well. The paper presents also a simulation of
Brazilian Balance of Payments and key macroeconomics variables for the period 1988/92 in
order to evaluate the proposal.

JEL Classification: H63; F34.

Economic fundaments of the Argentine-Brazil integration program
José Tavares de Araújo Jr.
Brazilian Journal of Political Economy

The paper deals with three aspects of the Argentine-Brazil agreement. First, it
shows that this agreement does not represent a movement towards bilateralism, but it is
an effort towards the global strengthening of Latin American economy. Secondly, it tries to
demonstrate that there is a considerable amount of potential trade to be exploited between
the two economies. Finally, it points out that the removal of trade barries will lead to an
improvement of the pattern of industrial organization within both economies.

JEL Classification: F15.

Context and strategy of the Argentina-Brazil integration program
Monica Hirst
Brazilian Journal of Political Economy

The relations between Argentina and Brazil suffered a major change since 1985,
with the start of a new integration project. Although it has been a bilateral iniciative, this
project may have great importance, in the long term, for all Latin America. Its goals are guite
broad, involving economic, political, strategic, and cultural variables. Another basic aspect
of this project is its commitment with the democratization process of both countries. The
successful impact of the Argentine-Brazilian project has been due to the fact that it is mainly
an iniciative of Alfonsin’s and Samey’s governments. lts duration however depends on the
economic and political stability in both countries, as well as the active participation of their
private sectors.

JEL Classification: F15.

Wages, inflation and distributive conflict: reflections on the sliding scale
Fábio Giambiagi
Brazilian Journal of Political Economy

This article tries to show some of the potential problems that appear with the
adoption of the automatic mechanism of wage increase known as “trigger point indexation”.
Theories about distributive conflict are the basis to describe the way the inflationary dynamic
behaves in a system of wage periodical indexation, which is compared with the “trigger
point “ system. The main conclusion is that if the government don’t manage to control prices
strictly, the menace of an acceleration of inflation is considerable. ln this context, the article
also discusses some of the different sceneries for the Brazilian economy that may be foreseen
for the next future as a consequence of the conflicts observed now.

JEL Classification: J38; J31.

The budget elaboration and execution process in Brazil: some of its peculiarities
Roberto Bocaccio Piscitelli
Brazilian Journal of Political Economy

The article touches the matter of the diverse costs on the Brazilian Public Federal
Administration – fiscal, monetary, of the public enterprises, and of the social welfare institutions
– the procedure for the elaboration, discussion, approval and – above all – execution
and respective evaluation. It tries to show clearly the dissociation between the cost and planning
also with the lack of objectiveness in establishing rules for the distribution of the funds.
ln parallel position the fragility of the systems of accompaniment and control unviable the
accomplishment of the purposes, conventionally expressed in the proposition, and it doesn’t
constitute for the reformulation of the principles and methods of work adopted until now.

JEL Classification: H61; H68.

The Cruzado Plan: theory and practice
Maria Sílvia Bastos Marques
Brazilian Journal of Political Economy

The purpose of this paper is to review the stabilization experience implemented
in Brazil in 1986. The first section discusses the theoretical foundations of the so-called
Cruzado Plan. A brief review of the performance of the Brazilian economy is presented in
the following section, as well as the main aspects of the stabilization program. The final section
analyses the implementation of the Cruzado Plan, its problems and the management of
economic policy during 1986, and the fírst months of 1987.

JEL Classification: E31; E52.


Critical analysis of the neoclassical interpretation of the process of modernization of the Brazilian agriculture
Robério Ferreira dos Santos
Brazilian Journal of Political Economy

In the present work, the neoclassical interpretation of the Brazilian agricultural
modernization process is criticized. Going back to historical facts, it is shown that a concentrated
agrarian structure, together with the systems of slavery and immigration utilized, were
the main factors to explain the low technology level used in agriculture until the mid 60’s. The
domestic economic policies, together with the availability of a technological “package” at the
international level, justified the acceleration of the modernization process since then.

JEL Classification: Q11.

Notes and Comments

Inbalance in the balance of payments
Samuel Kilsztajn
Brazilian Journal of Political Economy

This is a short note about the statistics of balance of payments and possible
causes for the deficit in the current account.

JEL Classification: F30; F32.