The inflation and Cruzado and Real Plans: an institutionalist interpretation

Abstract

This paper aims to present both an institutionalist interpretation of inflation and of the result of the Real Plan and the Cruzado Plan from the theory of regulation and the old institutionalism of Veblen. Using the Theory of Regulation we observe how the institutional forms of structure contributed to the persistence of and the end of inflation in Brazil. From the point of view of Veblen's institutionalism we show that the institutional forms have contributed to consolidating what is called the "inflation habit", present in Brazil throughout its history. This "habit" increased in relevance in the 1980's, and derailed the Cruzado Plan. On the other hand, with the new macroeconomic configuration and the Real Plan, the suppression of the habit to adjust prices finally took place, which in turn provided monetary stability.

Keywords:
Institutionalism of Veblen; Regulation Theory; Inflation; Cruzado Plan; Real Plan