Janete Leige Lopes

This work is the result of an empirical study concerning the Brazilian Economy. It was aimed to verify during the period between 1973 to 1996 this economy had been marked by the presence of a pattern of sticky-price. In case of this hypothesis was confirmed, the macroeconomic principles presentd by the New-Keynesian Theory would be the best to explain the Brazilian reality. In order to obtain those results we made use of GORDON’S theoretical model (1991) which allowed us to get estimation about the three different dimensions on which the prices rigidity could be represented: level, rate of change and inertia. The period studied pointed out to the presence of inertia, confirming that this period was indeed marked by an inflexibility of prices. Although some kind of flexibility was presented, it is important to make clear that was not perfect. Otherwise, we could have accepted market-clearing models support by New-Classical to explain the Brazilian Economy. The presence of some flexibility of the prices made it difficult for us to distinguish between the New-Classical and the New-Keynesian theories. Moreover, the presence of price inertia is strong enough to make us sure of rejecting the New-Classical macroeconomic principles. Thus, the Brazilian reality can be better explained by the NewKeynesian Economics School of thought.