Deciphered inflation

Luiz Carlos Bresser-Pereira ()

Brazilian Journal of Political Economy, 1996, vol. 16, issue 4, 515-531

Abstract: This paper is an account of the intellectual process that led, in the early 1980s, tothe definition of a new economic theory – the theory inertial inflation – and to the proposalof heterodox policies to deal with this type of high and chronic inflation, that, in intensityterms, stays between moderate or usual inflation and hyperinflation. The theory says thatthis type of inflation is the consequence of phased or staggered price adjustments. Economicagents are involved in an endless process of balancing and unbalancing relative prices, asthey keep up with the going inflation, formally or informally indexing their prices. To fightthis type of inflation orthodox or conventional fiscal and monetary policies are insufficient.In addition, it is necessary to adopt a heterodox mechanism that neutralizes inertia, makingpossible to stop inflation. It is part of a book in preparation where the author reports hisexperience as finance minister of Brazil in 1987. JEL Classification: E31; B22.

Keywords: Inflation; inertial inflation; history of economic thought; stabilization (search for similar items in EconPapers)
Date: 1996
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