Vol. 31 No. 3 (2011): Jul-Sep / 2011

Vol. 31 No. 3 (2011)

Jul-Sep / 2011
Published July 1, 2011


Rethinking macroeconomic policies for development
Deepak Nayyar
Brazilian Journal of Political Economy

The global economic crisis has created an opportunity to rethink macroeconomics for development. Such rethinking is both necessary and desirable. It is essential to redefine macroeconomic objectives so that the emphasis is on fostering employment creation and supporting economic growth instead of the focus on price stability alone. It is just as important to rethink macroeconomic policies which cannot simply be used for the management of inflation and the elimination of macroeconomic imbalances, since fiscal and monetary policies are powerful and versatile instruments in the pursuit of development objectives. In doing so, it is essential to the overcome the constraints embedded in orthodox economic thinking and recognize the constraints implicit in the politics of ideology and interests.

JEL Classification: E6; E50; E52; E58; O10; O11.

Justice and development in Amartya Sen’s though
Thomas H. Kang
Brazilian Journal of Political Economy

This article aims to present an overview of Amartya Sen’s thought, relating to his writings on political philosophy and his contributions to the field of development economics. This paper shows how justice and development are highly related in Sen’s approach based on the concept of capability. Along with this paper, we will present some debates between Sen and John Rawls, beside other critics. This is done to explain the complex theoretical system elaborated by him. In concluding, the paper shows that the objective of Sen is to find a satisfactory concept of development that is explicit in its ethical presumptions.

JEL Classification: O15; I30; B31.

The flows of FDI in Brazil in the 1990's a literatura in the light of the ongoing transformations
Nilson Maciel de Paula, Terezinha Saracini Ciriello Mazzetto
Brazilian Journal of Political Economy

The flows of foreign investments in Brazil starting from the 1990s have called attention due to the magnitude of the invested value, the prevalence of properties acquisitions as a preferential way of carrying out these investments, and for the primacy of the operations involving rivals companies. This article searches for an explanation for the cycle of foreign direct investment flows, which is happening in Brazil. Arguments were reconsidered on the existence of sole assets and the advantages of property and control as a basis for carrying out overseas investments, and to explicit their link with the M&As.

JEL Classification: F00; F2; L1.

Sustainable underdevelopment? Old and new contradictions in the periphery of capitalism
Jorge Luís Teixeira Àvila, Roberto Luís de Melo Monte-Mór
Brazilian Journal of Political Economy

This paper addresses the concept of sustainable development and, more particularly, its applicability in underdeveloped economies when analyzing reciprocal effects between economic organization and environmental issues. It also addresses the relationships between development and underdevelopment, from an ecological economics’ approach, and its theoretical implications regarding the concept of sustainable development. We conclude that the specificities of Latin American economies, when compared to those economies of developed countries, also entail, beyond economical disparities, the existence of strong antagonisms from an environmental standpoint, which are recurrently ignored by most of the interpretations concerning sustainable development.

JEL Classification: O10; Q57.

Public banks in mature financial sistems theoretical perspectivas and challenges to developing countries
Jennifer Hermann
Brazilian Journal of Political Economy

The paper discusses two theoretical approaches to the role of public banks (PBs): the Shaw-McKinnon model and an alternative Keynesian view. In the former, the PBs still in operation in less developing countries would be near to become fully unnecessary, in view of the advance of their financial development in the last twenty years. In the Keynesian approach this hypothesis is unlikely. Financial markets are viewed as structurally inefficient and “incomplete” for the requirements of the process of economic development. Nevertheless, it is undeniable that economic and financial development will require a definition of new strategies for PBs. The paper is concluded with a brief discussion of this issue.

JEL classification: O16; G28; H81.

Conservatism and rigidity in monetary policy an estimate of the BCB's reaction function (2000-2007)
André de Melo Modenesi
Brazilian Journal of Political Economy

This paper aims at evaluating the conduction of monetary policy after the adoption of inflation targeting. Formation of Selic rate is modeled by estimating a reaction function of the BCB. Results show an excessive degree of interest rate smoothing and a high level of equilibrium interest rate. This evidence supports the belief that Selic rate’s formation is ruled by a conservative behavior. The conservative conduction of monetary policy is related to two distinct features of BCB’s reaction function: i) the great weight of autoregressive components; and, chiefly, ii) a very high level of the equilibrium interest rate. The main conclusion is that, all remaining unchanged, the interest rate would hardly be reduced in a satisfactory way. Massive and chronic deflation would be needed if Selic were to reach a reasonable level, closer to that of rates in the rest of the world. This evidences the need for a debate on the adequacy of current stabilization strategy.

JEL Classification: E43; E58.

Surprises in relation to monetary policy and the capital market evidence from the Brazilian case
Walter Gonçalves Junior, William Eid Junior
Brazilian Journal of Political Economy

Monetary policy surprises and capital markets: evidences from the Brazilian case. This article evaluates the effects that monetary policy actions exert on Brazilian stock market. By the measures defined to estimate the surprise caused by Comitê de Política Monetária do Banco Central do Brasil (COPOM) decisions, it was verified that to a hypothetic unexpected 1% increase in the target rate is associated an 1.3% average fall of Bovespa Index. Additional tests did not show distinct reactions caused by direction decisions, neither evidences from relevant recent economic events or decision contexts having influences on the surprise responses.

JEL Classification: G14; G18; E52.

Pricing regulatiâon of individual health plans
Carlos Octávio Ocké-Reis, Simone de Souza Cardoso
Brazilian Journal of Political Economy

Pricing regulation of Brazilian private health insurance. Aggregate price indices measure variations in nominal prices. In this paper, we compare the inflation rates of the general economy and those of the health sector and private health insurance market between 2001 and 2005, based on the indices of Departamento Intersindical de Estatística e Estudos Socioeconômicos, of Fundação Instituto de Pesquisas Econômicas, of Instituto Brasileiro de Geografia e Estatística and IPEADATA database, to the private heath insurance readjustment applied by the National Private Health Insurance Agency (ANS). The health sector inflation rate was found stable and inferior to the general one, what would validate applying lower readjustments derived from official price indices.

JEL Classification: D40, I11, I18.

The influence of labor unions on wage formation in the sugarcane sector
Márcia Azanha Ferraz Dias de Moraes
Brazilian Journal of Political Economy

 The aim of this paper is to identify the determinants of the income of the employees of the sugarcane sector, and also for the sugar and ethanol industries. Special attention is given to union’s role. Earnings equations were estimated for these sectors and information on union’s action were collected in a field research. In the regressions estimated, the coefficients of the following variables were significant and had the expected signs: (i) gender (ii) region, (iii) education, (iv) threshold effect of education, (v) membership to labor unions. It was verified the existence and also the influence of labor unions on wage formation.

JEL Classification: J21; J43.

An account of new developmentalism and its structuralist macroeconomics
Luiz Carlos Bresser-Pereira
Brazilian Journal of Political Economy

This is a personal account of the identification and definition of “new developmentalism” – a national development strategy alternative to the Washington consensus –, and of a “structuralist development macroeconomics”: the sum of concepts and models that justifies theoretically that strategy. It is personal account of a collective work involving Keynesian, institutionalist and structuralist economists in Brazil. It is Keynesian because it emphasizes the demand side or the investment opportunities’ side of economic growth. It is structuralist because it defines economic development as a structural change from low to high value added per capita industries and because it is based on two structural tendencies that limit investment opportunities: the tendency of wages to grow below productivity and the tendency to the cyclical overvaluation of the exchange rate.

JEL Classification: B22; B31.