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date: 20 February 2019

Abstract and Keywords

This chapter analyzes the Brazilian inflation and stabilization experiences during a period spanning three decades, from 1960 to 1990. It focuses on five stabilization plans. The first is the PAEG Plan, a neo-orthodox stabilization plan, which did not eliminate inflation but reduced its trend rate. The PAEG Stabilization Plan started as a fully orthodox plan, but later, as the social cost imposed by the inertial component of inflation became apparent, an indexation mechanism was devised with a forward component in wages readjustment, decreasing the backward component. This mechanism, which intended to preserve the average real worker’s wage, became a standard tool of stabilization plans in Brazil, despite the criticism it received at that time. The other four are heterodox plans, Cruzado, Bresser, Summer, and Collor, implemented during the so-called lost decade.

Keywords: inflation, stabilization, heterodox stabilization plan, neo-orthodox stabilization plan, PAEG Plan, Cruzado Plan, Bresser Plan, Summer Plan, Collor Plan

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