Alternatives to stabilization: gradualismo, dollarization, and populism

Gustavo H. B. Franco ()

Brazilian Journal of Political Economy, 1993, vol. 13, issue 2, 196-215

Abstract: The paper discusses the issues involved in three different varieties of stabilizationplans: gradualism, dollarization, and social pacts. It is argued that the efficiency of eachalternative depends upon special conditions pertaining, by and large to the dynamics ofprice fixing in the Brazilian economy. Shock alternatives in particular, namely, price freezesor pre-fixing schemes, are said to have their usefulness attached to “backwards looking”price fixing behavior. Gradual strategies, on the other hand, especially when unambiguouslyorthodox, are said to be more efficient when “forward looking” behavior is adopted by pricesetters. The paper also discusses the conditions for the application of an Argentinean typedollarization in Brazil and also institutional peculiarities affecting the feasibility of “socialpacts” in Brazil. JEL Classification: E31; F31.

Keywords: Inflation; stabilization; dollarization (search for similar items in EconPapers)
Date: 1993
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