METODO DE RECOPILACION DE DATOS

The h ig h i n f l a t i o n regime i s not a mere t r a n s i t i o n between th e low i n f l a t i o n regime and th e h y p e r i n f l a t i o n regim e. I t i s , f i r s t o f a l l , th e outcome o f th e i n s t i t u t i o n a l response t h a t advanced c a p i t a l i s t economies g iv e t o th e o b s t a c le s f o r th e e s ta b lis h m e n t o f monetary c o n t r a c t s i n th e environm ent above d e s c r ib e d . As C a rva lh o (1992: 191-2) p o i n t s o u t .

I f i n f l a t i o n a c c e le r a t e s beyond what can be absorbed by an i n s t i t u t i o n a l system b u i l t on th e assum ption o f s t a b i l i t y , th e need f o r change w i l l become o verw h elm in g. . . . System ic i n f l a t i o n , th e n , may le ad t o a change in th e monetary regime i t s e l f , changing r u le s and p r a c t i c e s , p a r t i c u l a r l y o f c o n t r a c t s . When t h i s happens, th e economy may move i n t o th e h ig h i n f l a t i o n Regime.

These i n s t i t u t i o n a l and b e h a v io u ra l changes a re in te n d e d t o c o n t r o l th e two main sources o f d i s r u p t i o n o f th e p r e v io u s regim e, so t h a t th e u n i t y o f th e f u n c t io n s o f money can be re a s s u re d . In o t h e r words, th e y a re supposed t o c r e a t e an enviro nm ent in w h ic h , d e s p it e h ig h l e v e l s o f i n f l a t i o n (and d e s p it e th e a c c e l e r a t i o n o f these l e v e l s a t unknown r a t e s ) , c o n fid e n c e in

in s tr u m e n ts th e S t a te d e c la r e s as le g a l te n d e r - th e s o c i a l l y accepted means o f payment.

Salama and V a l i e r (1992: 17-8, t r a n s l a t e d by t h i s a u t h o r ) propose a s i m i l a r concept ( "o n g o in g h y p e r i n f l a t i o n " ) t o d e s c r ib e t h i s process o f

th e s t a b i l i t y o f th e r e l a t i o n s o f c o n v e r t i b i l i t y and r e p r e s e n t a t iv e n e s s among th e v a r io u s a s s e ts w h ich p e rfo rm th e f u n c t i o n s o f money can be m a in ta in e d .

To be s u c c e s s f u l, th e n , th e i n s t i t u t i o n a l a d a p ta tio n must p r o v id e p ro d u c e rs b o th w i t h l i q u i d a s s e ts t o s e rv e as s t o r e o f v a lu e and w i t h a s ta n d a rd o f v a lu e w hich does n o t lo s e i t s v a lu e w i t h th e r i s e o f p r i c e s in terms o f th e n a t io n a l c u r r e n c y . These changes a re u s u a l l y c a r r i e d o u t by t h e government, w hich in tr o d u c e s i n d e x - l i n k e d a s s e ts and d e f in e s th e r u le s f o r th e in d e x a t io n o f c o n t r a c t s . M o r e o v e r , th e repeated i n t e r p l a y between th e w idespread use o f t h i s new i n s t i t u t i o n a l framework and i t s enforcem ent by th e government le a d s p ro d u c e rs t o d eve lop c o n fid e n c e in i t s s t a b i l i t y o v e r tim e . That i s , th e g e n eral acceptance o f th e i n s t i t u t i o n a l changes in tr o d u c e d and guara nte ed by th e government g e n e ra te s c o n fid e n c e in th e f a c t t h a t , t o g e t h e r , those monetary and f i n a n c i a l in s tr u m e n ts are capa ble o f p e r fo rm in g th e more b a s ic and im p o r ta n t f u n c t i o n s o f money,

r e g a r d le s s o f th e h ig h r a te s o f i n f l a t i o n . As a r e s u l t , th e n , b o th h ig h i n f l a t i o n and those i n s t i t u t i o n a l and b e h a v io u ra l changes become l a s t i n g phenomena and are d e e p ly i n s e r t e d in th e m e n t a l i t i e s and p r a c t i c e s o f p ro d u c e rs , th e re b y engende ring a c u l t u r e o f i n f l a t i o n , so t h a t th e d i s r u p t i v e e f f e c t s o f h ig h i n f l a t i o n are n e u t r a l i z e d and money i s pre se rve d as a s o c i a l i n s t i t u t i o n .

As th e main f e a t u r e o f th e h ig h i n f l a t i o n regime i s th e e x is te n c e o f widesp rea d in d e x a t io n o f a s s e ts and c o n t r a c t s , a more d e t a i l e d a n a ly s i s o f t h i s mechanism used t o p re s e rv e th e u n i t y o f th e f u n c t i o n s o f money i s in

See C a rva lh o (1986) f o r a t h e o r e t i c a l a n a ly s i s o f th e reasons why th e p r i v a t e s e c t o r i s r e l u c t a n t t o in dex i t s c o n t r a c t s . Chapter 5 below d is c u s s e s t h i s q u e s tio n in th e c o n t e x t o f th e B r a z i l i a n e x p e rie n c e .

o r d e r B a s i c a l l y , in d e x a t io n means t h a t th e v a lu e s expressed in terms o f th e s ta n d a rd o f v a lu e a re p e r i o d i c a l l y a d ju s te d a c c o rd in g t o th e v a r i a t i o n o f an in dex ( o r a s e t o f in d i c e s ) o f p r i c e s , so t h a t any indexed v a lu e remains c o n s ta n t in terms o f th e v a lu e o f th e a s s e ts w h ich compose th e adopted in dex (Beckerman, 1992: 126). A c c o r d i n g l y , th e a s s e ts used as s t o r e o f v a lu e would have t h e i r p u rc h a s in g power p e r i o d i c a l l y a d ju s te d t o i n f l a t i o n , so t h a t th e y c o u ld be regarded as p o t e n t i a l means o f payment. S i m i l a r l y , c o n t r a c t s e s t a b l is h e d in terms o f th e n a t io n a l c u rre n c y would be r e g u l a r l y a d ju s te d t o meet th e r i s e in p r i c e s , so t h a t th e amount o f means o f payment d e l iv e r e d t o d is c h a rg e an indexed c o n t r a c t would re p re s e n t th e same amount o f w e a lth ( i . e . p u rc h a s in g power) th e c o n t r a c t promised t o t r a n s f e r when i t was e s t a b l is h e d . Yet i f th e u n i t y o f th e f u n c t i o n s o f money i s t o be m a in ta in e d f o r th e p ro d u c e rs th ro u g h in d e x a t io n , th e in dex w hich c o r r e c t s both th e v a lu e o f th e p r o d u c tio n c o s ts and th e p u rc h a s in g power o f th e a s s e ts kept as s t o r e o f v a lu e in terms o f th e le g a l te n d e r money ( t h e l e g a l l y e n fo rc e d means o f payment) has t o be expected t o express th e r i s e in p r i c e s q u i c k l y and w e ll enough t o g iv e them c o n fid e n c e as t o th e re a l c o n te n t o f th e c o n t r a c t s o v e r tim e . Hence th e im p o rta n ce o f th e s t a b i l i t y o f and c o n fid e n c e in th e i n s t i t u t i o n a l s e t t i n g t h a t r e g u la t e s th e r e l a t i o n s o f c o n v e r t i b i l i t y and r e p r e s e n t a t iv e n e s s between th e in s tr u m e n ts

I f a p a r t i c u l a r economy i s not c a p a b le o f a d a p tin g i t s monetary and f i n a n c i a l system th ro u g h th e i n t r o d u c t i o n o f a comprehensive in d e x a t io n o f c o n t r a c t s , th e o n ly a l t e r n a t i v e a v a i l a b l e f o r th e agents i s t o keep a f o r e i g n c u r re n c y as s t o r e o f v a lu e and t o c o r r e c t c o n t r a c t v a lu e s p e r i o d i c a l l y a c c o rd in g t o th e v a r i a t i o n o f th e exchange r a t e o f t h i s c u rre n c y f o r th e n a t io n a l money. As Dornbusch e t aT. (1990: 22) a f f i r m , " [ e jx p e r i e n c e has shown . . . t h a t in c o u n t r i e s w i t h c h r o n i c a l l y h ig h i n f l a t i o n f i n a n c i a l m arkets adapt t o p r o v id e s t a b l e a s s e ts , and when th e y do n o t, th e d o l l a r becomes an o p t i o n " . A lth o u g h b r o a d ly p e r fo rm in g th e saine r o l e as in d e x a t io n ( i . e . t o m a in ta in th e u n i t y o f th e f u n c t i o n s o f money), th e use o f f o r e i g n c u r r e n c ie s i s a much more u n s ta b le a l t e r n a t i v e , f o r th e