Private Sector Participation: A Theoretical Justification of the Brazilian Position

The Brazilian position on the issue of private sector participation in the efforts to forestall and resolve emerging markets crises is that there should be an approach of contacting and convincing a large number, but not the totality, of private creditors. They should be convinced that the international public sector loans will allow a transition to stability that is overfinanced in case they voluntarily join in by maintaining their exposure to the country, at the spreads they choose, and with the counterparts they wish to have as clients. We model private sector participation by means of a game. We show that the traditional argument that there is a coordination problem among the private creditors does not exist is in a model without Knightian uncertainty, because there is only one Pareto dominant Nash equilibrium which involves participation. By introducing Knigthian uncertainty, we show that if the degree of uncertainty, as measured by the uncertainty aversion, is high enough, then there is only one Nash equilibrium under uncertainty, which involves nonparticipation. Finally, we show that if there is a large enough number of private creditors who decrease their uncertainty aversion, then again private participation becomes the unique Pareto dominant Nash equilibrium under Knightian uncertainty. If we interpret the approach and convincing of the private creditors as decreasing their uncertainty aversion, then this last result is a justification of the Brazilian position. In fact, the private creditors would voluntarily choose to maintain their exposures, because private sector participation is the unique Pareto dominant Nash equilibrium under uncertainty of the game.

Effects of growth on relative prices in a two-good n-country model

This paper analyses the effect of an increase of the enodwment in a two-good n-country model. It is shown that the endowment of good one can go up and the price of the same good relative to good two can also increase. However, this "perverse" effect cannot occur in both goods if the economy is at a tatonnement stable equilibrium. This is a new restriction in the form of the equilibrium manifold of an exchange economy. It is also shown that this "double perversity" is the case with normal goods when the equilibrium is unstable.

Entangled inequalities, state, and social policies in contemporary Brazil

In line with developments observed in several Latin American countries, inequalities in Brazil have significantly declined since the Workers’ Party, PT, came to power in 2003. During the two administrations of former President Lula da Silva (2003-2006 and 2007- 2010) and the first administration of President Dilma Rousseff (2010-2014), economic growth, improvements in labor market, progress in deprived regions and pro-poor policies interacted positively as drivers of inequality reduction. But due to the recent economic stagnation and political instability, Rousseff, in her new administration (2015- 2018), is facing serious difficulties in sustaining the social gains obtained during the last twelve years. It seems that continuing the progress in inequality reduction in times of low economic growth requires deeper structural changes such as a progressive tax reform in order to effectively redistribute resources from the rich to the underprivileged classes. This paper discusses recent developments in Brazil from the perspective of entangled inequalities, a concept applied here with the objective of enlarging the narrow definition of inequality brought forward by hegemonic scholarship. After a brief introduction into the conceptual framework of entangled inequalities, the paper presents, in its second section, an overview of recent changes in Brazilian social structure. The third section discusses the role of the Brazilian state in reducing inequalities. Finally, recent developments in Brazil with regard to the entangled inequalities framework are assessed

Unequal and Divided: The Middle Classes in Contemporary Brazil

The middle class, or rather middle classes, to do justice to their heterogeneity, have been and continue to be at the centre of the long political and economic crisis that has been ravaging Brazil since 2014. Available interpretations that try to explain the positions taken by different political authors are biased by structural, ideological, or cultural determinism. To escape these determinisms, I draw on Stuart Hall’s political sociology in order to understand the link between the class situation of the middle classes and their constitution as political subjects of various shades as contingent intersectional articulations. The emphasis on contingency obviously does not imply a belief that political developments are fortuitous and detached from social structures. Nor does it ignore the existence of groups with deeply held ideological or cultural convictions who consistently adopt, over long periods of time, political attitudes compatible with these beliefs. However, taken as a whole, the middle classes have shown a very heterogeneous and changing political trajectory over time. They adhere to discourses - both right-wing or more egalitarian ones - and make political choices based on the power of these narratives to capture, in given circumstances, their anxieties, expectations, claims and aspirations

Researching entangled inequalities in Latin America: the role of historical, social and transregional interdependencies

Social inequalities have conventionally been researched as synchronous processes within the frame of national borders and articulated in the concept of class. This means that established scholarship has not adequately considered the historical dimensions and global entanglements or interconnections between class and other social classifications that have shaped existing inequalities. Starting from world system and postcolonial theories as well as from recent debates on transnationalism, the paper first presents a set of resources for overcoming current deficits in the research of inequalities. In order to illustrate how these resources analytically operate, the second part of the paper discusses the case of social inequalities which affect Afrodescendants in Latin America