Elements for a political economy of the reforms in Lula Government

Abstract

“Elements for a Political Economy of the Reforms in Lula Government”. Under the hypothesis that structural reforms are positive for the economy, it is argued that, in a government of the 'right', there exists stable political economy equilibrium: some reforms are made and the economy has a median performance. In a government of the 'left', such median equilibrium is unstable. A situation of double equilibria is characterized: the government either succeeds fully or it fails miserably. The conclusion is that the success of Lula's government will depend on the result of a race between the of his popularity, on one hand, and the improvement of the economy, on the other.

JEL Classification: E61; E65; O11; O54.