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In 1985-86 Argentina, Brazil and Israel initiated programs of stabilization after episodes of high and sharply accelerating inflation. Among the key features of each stabilization program were the use of wageprice controls, a fixed exchange rate and fiscal correction as well as a significant expansion in the nominal quantity of money. The combination of fiscal correction and incomes policy has come to be known as "heterodox" stabilization policy, thus opposing it to the conventional IMF programs which emphasize tight monetary and fiscal policies as the exclusive instrument of stabilization. The stabilization programs in Argentina and Israel have now been in force for over a year and the more recent one in Brazil for half a year. There is accordingly enough evidence to make a first judgment on the success and the limitations of these new schemes. At the same time it is worthwhile spelling out some of the special features of stabilization and the resulting intellectual case for heterodox programs. The paper focusses on the conceptual issues related to the use of incomes policy in the context of stabilization when inertia is a central feature. The analysis includes the relation betweeen deficits and inflation, inertial inflation and the basics of monetary reform. We also review the actual stabilization experience in Argentina, Brazil and Israel. The paper concludes with a discussion of the political dimension of stabilization, showing the extraordinary political popularity of the new programs.
Mostra-.se que com preferencias pela incerteza (no sentido de Knight) dadas pela axiomatizac;ao de Schmeidler (1982, 1984) e Gilboa (1987) (e nao pela de Savage (1954» pode-se obter inercia nn escolha 6tima de cartcira com quanti� clades positivas de todos os ativos. 0 artigo tambem apresenta uma resenha unificada da literatura recente sobre a incerteza, com especial enfase no modelo de probabilidades subaditivas.
Rational expectations are viewed as a Nash equilibrium of a game. If a change of regime occurs, it is argued that it is very unlikely that the economy is going to achieve the new equlibrium at once. In fact, one can show that if the public acts prudently endogenous inflation inertia arises. Hence , at this point, government intervention by means of income's policies is required, in the sense that it guides the economy to the new equilibrium, much faster than the market. One also analyses, the effects of income's policies on a staggered wage setting.
The present paper analyses the problems of anti-inflationary policies facing overlapping wage contracts. It extends the pioneer conclusions of Stanley Fischer and John Taylor in late seventies, showing thatl with overlapping wage contracts monetary policies can affect real economic variables, even under rational expectations. Two important conclusions are that anti-inflatíonary policies open a door to temporary real wage increases without adverse side-effects on outpout and employment. And that, with overlapping wage contracts inflation cannot be sopped immediatly if nominal wages cannot be cut. The paper also discusses a number of propasals to synchronize wage adjustments moving from the overlapping contract structure to perfect indexation.
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