Macroeconomic performance and inequality: Brazil 1983-1994

We examine how macroeconomic performance, mainly in the role of high rates of inflation, affected earnings inequality in the 1980s and early 1990s in Brazil. The results-based initially on national timeseries, and then on the relatively novel sub-national panel time-series T N data and analysis-show that the extreme inflation, combined with the incomplete indexation coverage seen at the time, had a regressive and significant impact on inequality. Thus, sound macroeconomic policies, which keep inflation low and stable in the long run, are to be a necessary first step of any policy package implemented to alleviate inequality in Brazil.