Vol. 13 No. 1 (1993): Jan-Mar / 1993

Vol. 13 No. 1 (1993)

Jan-Mar / 1993
Published January 1, 1993


The dynamics of hyperinflation
Fernando de Holanda Barbosa, Waldyr Muniz Oliva, Elvia Mureb Sallum
Brazilian Journal of Political Economy

A hyperinflation model is developed where the money and goods markets clear
instantaneously, expectations are rational and there is inertia in the price system due to
wage indexation mechanisms. The model is described by a nonlinear system of differential
equations and Hopf bifurcation theorem, regarding the public deficit as a parameter, is used
to study the dynamic properties of the system. The dynamics of the model is capable of generating
hyperinflation processes, as well as other paths that are commonly observed in high
inflation countries.

JEL Classification: E31; E37.

The liquidity of financial assets and “zeragem automática” of the market
Carlos Eduardo Carvalho
Brazilian Journal of Political Economy

This article stresses the pertinence of the concepts of indexed money, as well as of excessive liquidity of financial assets, for the analysis of stabilization programs in Brazil. Thc author criticizes the analysis of A. C. Pastore, who stresses the problems associated to the so-called “zeragem automática” (the automatic financing of financial institutions’ overnight positions by the Brazilian Central Bank throughout the eighties). It is argued here that the “run” of investors away from certain financial assets should be understood as increases in the number of transactions rather than merely as a larger demand for cur-rency, since the funds withdrawn return to the banks at once and withdrawals can be made even when undesired by the Central Bank. This article insists on the difficulties brought by combinations of a high amount of quasi-money with fiscal and exchange pressures that are strongly expansionary, including pressures arising from the servicing of the public debt, and suggests that such difficulties may have led the Central Bank to provide automatic financing as mentioned.

JEL Classification: E31; E58.

The effects of exchange policy on public finances
Márcia Nabão
Brazilian Journal of Political Economy

The study measures the direct effect of exchange policy on public finances in Brazil in the period 1985-1988. With the aim of measuring exchange policy effects, the change of real exchange rate vis-à-vis the american dollar will be used. The compilation of all public revenues and expenditures, affected by exchange rate changes, as well as their consolidation, was performed. For this purpose, thc public sector balance of payments was drawn from actual data and, in their absence, from estimates. The survey concludes that the relationship between the Brazilian public sector and external sector, governed by the high external indebtedness determines a negative direct impact response of thc public sector fiscal deficit to a real depreciation of the foreign ex-change rate.

JEL Classification: F31; H62.

Minimum prices and stabilization of agricultural prices
Maria Auxiliadora de Carvalho, César Roberto Leite da Silva
Brazilian Journal of Political Economy

This work analyses the minimum price policy in Brazil. Some measures of price
spread are performed in monthly prices time-series to estimate the impact of the policy on
the series of rice and corn. The results suggest that changes in the price policy would not
modify the historical performance of the price time-series for these crops, except the case of
the intervention prices that has worked since 1988.

JEL Classification: Q11; Q14.

Trade liberalization, regional integration and Southern Common Market: the Brazilian role
Rubens Antonio Barbosa
Brazilian Journal of Political Economy

This paper takes an evolutionary and systemic approach on the question of regional integration in Latin America, reviewing the main instruments of preferential trade in the region, from the experience of Laia (Latin American Integration, Aladi) to the Southern Com-mon Market (Mercosul), and its intermediate stage, the Argentina-Brazil integration program. Special attention is given to the position of Brazil, being the main partner in the intrarregional trade of Aladi member countries as well as the key country for the success of Mercosul, the most recent experiment in the Latin American integration process. Aladi’s preferential trade arrangements were deeply affected by their economic crises of the 80’s, which touched practically all of its member countries and thus reducing the intrarregional trade flows and the trade creation virtues of its main multilateral mechanism, the Regional Tariff Preference (PTR). By the middle of the 80’s, Brazil and Argentina had already decided to launch a new, bilateral, integration process, which expanded and encompassed the sectorial agreements subscribed under the Aladi framework. After agreeing upon the institutional procedures for the bilateral integration process, the two countries negotiated and concluded an Economic Complementation Agreement (ACE) with be-came the basis for the Assunción Treaty, signed in March 1991 with the adhesion of Paraguay and Uruguay. The new subregional integration experiment takes place in the middle of trade liberali-zation processes and the dismantling of import substitution policies in the four countries.

JEL Classification: F15.

Entrepreneurial decisions in a monetary production economy: notes for a post-Keynesian theory of the firm
Carmem A. Feijó
Brazilian Journal of Political Economy

We have focused our attention on the fact that in an uncertain world, expectations
play an important role when decisions about production and investment are made.
In spite of dealing with different problems, decisions about production and investment are
interrelated because, once is explicitly considered, long term decisions have to be translated
into short term procedures. We suggested that several variables could be identified as
guiding investment decisions: expectations about prospective yields, internal savings and
unexploited internal facilities to diversify the production line and, finally, the conditions to
debt finance new investment plans.

JEL Classification: E12; E22.

The financial system and the financing of growth: a post-Keynesian alternative to the conventional view
Rogério Studart
Brazilian Journal of Political Economy

Financial liberalization models have been for the last nineteen years the foundation
of mainstream thinking on the role of financial markets and institutions in economic
development and the basis for policymaking in many LDCs. This paper presents a critical
appraisal of the financial liberalization literature and points to an alternative view based on
Post Keynesian theory. That alternative view is based on three aspects of monetary economics.
First savings does not provide finance: the role of savings is not related to the financing
of capital accumulation, but to its funding. Second, capital accumulation increases banks’
fragility, which can be alleviated through funding. Finally, how we model the finance-investment-
saving-funding circuit depends on institutions and conventions, which are evolving.

JEL Classification: E21; E22; E12; G00.

The concepts of rational action and the limits of the economic approach
Eleutério F. S. Prado
Brazilian Journal of Political Economy

This paper presents the four concepts of rational action, that Habermas find
himself revising social science literature. They are teleological, normative, dramaturgic and
communicative action. It shows, after this, how these concepts can be employed to situate
analytically action notions used in Political Economy. It shows too, next, how these concepts
can help to find the limits of economic approach. It is criticized, finally, the economic imperialism
that is shown to express the expansionism of instrumental reason.

JEL Classification: B41; D01.


External financial support and economic stabilization
Arno Meyer
Brazilian Journal of Political Economy

Este ensaio tenta avaliar a abordagem do ministro Marcílio Marques Moreira
nas negociações de dívida externa do Brasil. Começa a reconhecer que a reestruturação da
dívida externa deve contribuir simultaneamente para a correção dos desequilíbrios financeiros
do setor público e para a estabilidade da taxa de câmbio. A decisão de simplesmente
aderir aos acordos atuais do tipo Clube de Paris e Plano Brady para países de renda média
resultará em um pequeno alívio do serviço da dívida. A estratégia do ministro Marcílio
exige, portanto, mais ajustes do setor público e novas entradas de capital para ter sucesso.
A correção dos desequilíbrios do setor público ainda não foi alcançada, e os investidores
estrangeiros, diante da alta instabilidade macroeconômica, ainda se apegam a instrumentos
de curto prazo com altos retornos que se sabe serem inadequados para financiar políticas
de estabilização. A assinatura de acordos com credores externos antes de atingir os requisitos
para atendê-los de forma não inflacionária é a principal falha da estratégia.

JEL Classification: F32; E31.

Hirschman and the rethoric of reaction
Maria Valéria Junho Pena
Brazilian Journal of Political Economy

The communication deals with the 1991’s book of Albert O. Hirschman, Rhetoric
of reaction: perversity. futility. Jeopardy, showing its importance in relation with the
contemporary debate on the possibilities of the welfare state. The thesis of Hirschman is that
the contemporary conservative criticism on the welfare state is a revival of the thesis that
had been already argued before opposing the expansion of civil and political rights. The same
way as those rights, contemporary social rights would: (i) produce the contrary of what
is the desire of policymakers; (ii) produce no effect at all; (iii) cost too much, jeopardizing
democracy or economic growth. Perversity, futility and jeopardy are the main attributes of
action according to the conservative view; that’s why its proposal is so reactionary. That is
why, as well, considering the danger of action, its success rests on its competence to persuade
that history not allowing anything to be done or to be created. Politics is just a case for
administrative skills.

JEL Classification: Y30.