Papers presented by Melissa Teixeira since 2019

2024 Providence, Rhode Island

"Inflation and Popular Investment Strategies in 1980s Brazil: The Case of Telebrás"

Abstract:

In the 1980s, Brazil’s economy experienced hyperinflation as the country transitioned to democracy following 21 years of military dictatorship. This paper explores the policy responses to high inflation—namely the Plano Cruzado implemented by President José Sarney in 1986—and some investment strategies that Brazilians adopted in order to maximize their eroding purchasing power and find new instruments to store wealth for the future. In particular, it identifies an unlikely investment vehicle: buying and selling telephone lines from the state-owned utility company Telebrás on the secondary, or parallel, market. The paper considers how Telebrás attempted to expand its telecommunications infrastructure and why it opted for a distribution model in which telephones were bought and sold as property. The telephone sector offers a compelling case study for two reasons. First, the parallel market emerged precisely because demand for telephones far outpaced the state’s ability to expand telecommunications infrastructure, which makes this sector part of a larger story of evolving citizen expectations about what constitutes an essential service or a fair price during an economic crisis. Second, the legal and political debates that emerged surrounding government actions to limit or prohibit the buying and selling of telephone lines on the parallel market puts debates over the government’s role in limiting property rights for the sake of the public good at the core of how we think about the consequences of inflation. The parallel telephone market is thus not only important for understanding individual economic behavior in the context of hyperinflation, but also the shifting meanings of public and private. That a public utility became the object of hoarding, speculation, and corruption is all the more important because these debates later shaped how Brazil’s government privatized state-owned companies like Telebrás in the 1990s.

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