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MACROECONOMIC PERFORMANCE AND INEQUALITY: BRAZIL, 1983–94
Author(s) -
BITTENCOURT Manoel
Publication year - 2009
Publication title -
the developing economies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.305
H-Index - 30
eISSN - 1746-1049
pISSN - 0012-1533
DOI - 10.1111/j.1746-1049.2009.00075.x
Subject(s) - economics , indexation , inflation (cosmology) , inequality , earnings , econometrics , macroeconomics , monetary policy , monetary economics , finance , mathematics , mathematical analysis , physics , theoretical physics
We examine how poor macroeconomic performance, mainly in terms of high rates of inflation, affected earnings inequality in the 1980s and early 1990s in Brazil. The results, based initially on aggregate time series, and then on sub‐national panel time‐series data and analysis, show that the extreme inflation, combined with an imperfect process of financial adaptation and incomplete indexation coverage, had a regressive and significant impact on inequality. The implication of the results is that sound macroeconomic policies, which keep inflation low and stable in the long run, should be a necessary first step of any policy package implemented to alleviate inequality in Brazil.