ABSTRACT
The Brazilian economy, as is the case of some other Latin American countries, has been chronically affected by high inflation rates. In the end of the Second World War up to 1995, annual inflation was below 10" on only two occasions: in 1948 and 1957. Also, a similar tendency was present in neighboring Argentina. In the second half of the 1980s, two ideas were dominant among Brazilian politicians. First, economic growth was viewed as a necessity in order to reduce poverty and promote development in a country plagued by social inequalities. Secondly, there was strong opposition to any proposal perceived as conservative, especially those viewed as originating from international financial institutions, particularly the IMF. After a long series of failed stabilisation attempts, all of them based on ideas proposed by Brazil's so-called economistas heterodoxos, monthly inflation reached almost 50" in June 1994, immediately before the Real plan was launched.
