Vol. 18 No. 2 (1998): Apr-Jun / 1998

Vol. 18 No. 2 (1998)

Apr-Jun / 1998
Published April 1, 1998


The new neoclassical theory of growth and the problem of Brazilian economic underdevelopment
Newton Paulo Bueno
Brazilian Journal of Political Economy

The purpose of the paper is to show that endogenous growth theory is at best insufficient
to explain Brazilian economic underdevelopment. The main reason for this is that
this theory gives a major importance to the role of human capital in the process of economic
growth which is not justifiable in the Brazilian case. Instead of this, the main problem of the
Brazilian economy seems to be the incapacity of its modem sector to absorb the majority
of the population. This cannot be done only through human capital increase; it requires in
first place a major physical investment program in order to enlarge the size of the modem
sector nowadays opened only to a minority of the population which is insufficient to allow
Brazilian economy recovery.

JEL Classification: J20; J24; B50.

Financial ‘globalization’ and exchange rate regimes
Paulo Nogueira Batista Jr.
Brazilian Journal of Political Economy

This paper argues that, although international capital flows have increased
rapidly in recent decades, financial markets are still far from forming a unified global market.
It also argues that the effect of increasing capital mobility on national economic policy
autonomy continues to depend, to a large extent, on the choice of the exchange rate regime.

JEL Classification: F31; F62.

The moral of public debt
Marcos Fernandes Gonçalves da Silva
Brazilian Journal of Political Economy

This paper deals with the moral dimension of the public debt and its theoretical
reference is constitutional economics. It is argued that the main reason to the existence of
any moral link between public debt and ethics is the transference of costs to future generations.
Firstly, the article explores James Buchanan’s public debt analysis. Secondly, is described
in the paper the neoclassical point of view about the matter. The main purpose here is
to establish, starting from the positive point of view and passing through- out a normative
one, the role of a deontological analysis of the debt burden. After this, I make the linkage
between institutions, incentives’ schemes and debt.

JEL Classification: H63; D72; D73.

Richard Kahn’s short-term economics and the beginnings of oligopoly theory: a contribution to the history of contemporary economic thought
Claudia Heller
Brazilian Journal of Political Economy

This article aims to contribute to the history of contemporaneous economic
thought. It deals with Richard Kahn’s fellowship dissertation, and its influence on the development
of the theory of imperfect competition and on the theory of oligopoly. It discusses
the author’s claim of being the first to create the “kinked demand curve” even before the
work of the Oxford Economic Research Group was initiated. It also argues that he developed
a way of measuring the “degree of monopoly” before Kalecki.

JEL Classification: B22; B21; B31.

Evaluation of two trends in environmental economics: the neoclassical school and the economics of survival
Charles C. Mueller
Brazilian Journal of Political Economy

It is possible to evaluate the main schools of thought in environmental economics
based on a stylized view of sustainable development. This view considers that is sustainable
the development that assures: at least the maintenance of the level of well-being of the current
generation of inhabitants of the first world; an increase in the well-being of the present
generation inhabiting the poor countries; and, the ability of the future generations to maintain
or improve their well-being. ln principle, a school of thought in environmental economics should
consider these three aspects; however, some emphasize one, others stress another of these aspects.
Based on a framework founded on the above concept of sustainable development, the paper
presents an evaluation of two of these schools of thought: neoclassical environmental economics, emphasizing the short term and industrialized market economies; and a school which could be
termed the economy of survival, emphasizing the very long term. It begins with a discussion of
the recent insertion of the environmental dimension in economics, follows with a review of the
concept of sustainable development, which is adapted for the evaluation. It concludes with a
discussion of the main contribution of the two schools, and of the main contrasts between them.

JEL Classification: B29; B21; B59; Q50.

The magic of Mr. Gustavo Franco, revisited
Ruben Dario Almonacid
Brazilian Journal of Political Economy

After the introduction of the Real Plan in 1994 Brazil has been following a
dynamic path which implied a) a strong appreciation of the real exchange rate, generating
a significant deterioration of the Trade and Current Accounts and b) a heavy use of foreign
loans requiring the maintenance of very high interest rates to attract new capital, in order
to finance these deficits. Given the numbers involved in the Brazilian experiment, this path
is not sustainable in the long run, since the foreign debt grows explosively, implying that,
sooner or later, it will need to be corrected. This paper presents some simulations showing
some restrictions that an equilibrium path must satisfy.

JEL Classification: E52; F32.

On paradigms and myths: notes on Chilean pension funds
Manfred Nitsch, Helmut Schwarzer
Brazilian Journal of Political Economy

The paper evaluates the Chilean pension reform of the early 1980s by contrasting
preliminary results after 15 years of operation against the promises embedded in
the proposals originally made. Special attention is given to following topics: transparency,
efficiency, coverage, benefits delivered, demographic issues, saving effects and the role of
the State. The text concludes by stating that promises made have not necessarily been accomplished
and that Latin American countries should think carefully whether the switch to
Chilean-like fully-funded old-age pension schemes is really able to offer an encompassing
solution for the current social security problems.

JEL Classification: N36; H55.

Central banking, democratic governance and polítical authority: case of Brazil in a regional perspective
Lourdes Sola, Christopher Garman, Moises Marques
Brazilian Journal of Political Economy

By examining the relationship between democratic governance and monetary
authority this paper accomplishes two principal tasks. First, it justifies placing the study of
monetary authority as a central item on the research agenda of political scientists. Beginning
from the premise central banks constitute a special mode of political authority, we examine
trade-offs between questions of transparency, democratic accountability, and public sector
efficiency. Second, by conducting an empirical study of monetary authority for the Brazilian
case, the paper inverts a commonly held assumption within the study of central banks. Rather
than argue price stability follows from an autonomous central bank, the Brazilian case
demonstrate nearly the opposite can take place.

JEL Classification: E58.


Political fantasy: the new interpretation of the II PND
João Paulo dos Reis Velloso
Brazilian Journal of Political Economy

This paper discusses the conclusions from the article “Uma alternativa de interpretação
do II PND”, where the authors try to give a new interpretation to the rationality
– or the lack of it – to the II PND (Second National Development Plan) of the Geisel administration.
We understand that the II PND did not lack economic reasoning and that the
said article failed to attribute patrimonialism characteristics to the planning and execution
of the Plan.

JEL Classification: N16; O21.

Political fantasy or fantasy politics?
Basilia Aguirre, Fabiana da Cunha Saddi
Brazilian Journal of Political Economy

This paper is a response to the commentary of Velloso to our previously published
article regarding the II PND. We disagree with Velloso on his counterargument to our
conclusions as the commentary did not improve the discussion neither brought new data
dismissing our findings.

JEL Classification: N16; O21.