Notes on the Brazilian inflationary process: 1986-1991

ABSTRACT The aim of this essay is to examine the 1986-91 Brazilian inflationary process. This essay will take the broadest analytical line, considering the inflationary process resulting from the evolutionary dynamics of the elements that affect the aggregate supply and demand. Regarding the aggregate demand shifts we emphasize the relationships between fiscal and monetary policies. We stressed that the impact of public sector deficit has been seen much more as a financing problem rather than the result of its levels. Regarding costs we emphasize the role of the relative price of competitive sectors that are more important in determining real wages and those of the oligopolistic sector. Our study seems to suggest that the causes of Brazilian inflationary process are many and complex and their solution do not depend solely upon the squeeze of the public sector deficit.