From Cruzado to Collor: Stabilization Plans and Agriculture

ABSTRACT This paper traces the macroeconomic roots of the current agricultural crisis. It shows that the increase in inflationary instability after 1986, and the policies adopted by the Government, since then, to fight hyperinflation, caused the terms of trade of agriculture to be- come much more unstable, at the same time that the Government pulled back the support they had been providing to agriculture; these adverse conditions ultimately caused the reduction of activity levels in agriculture in 1989 and 1990. The paper concludes by pointing out the implications for the current stabilization strategy.