Stabilization in an adverse environment: The 1987 Brazilian experience
Luiz Carlos Bresser-Pereira
In John Williamson, org. (1993) The Political Economy of Policy Reform. Washington: Institute for International Economics: 333-354 (No livro, título reduzido para “Brazil”).
Political support for reforms depends on the society's perception of the for the reform and of the net costs of transition. Economic reforms will be successful or not depending on their efficiency, ie, on the competence of reformers, and on the political support they are able to elicit. The 1987 Bresser Plan was partly orthodox because involved fiscal adjustment, partially heterodox because it aimed to neutralize inertial inflation. It was preceded by a Macroeconomic Contro Plan. The Bresser Plan failed because it lacked political support from populists that rejected fiscal adjustment and from businessmen that refused to pay taxes.The net costs of adjusting the Brazilian economy were still positive in 1987.