Abstract
The Brazilian economic theorist and policymaker Mario Henrique Simonsen elaborated in the early 1970s a theory of inertial inflation based on the indexation of economic contracts. He later established that lagged indexation under rational expectations brings about a trade-off between inflation and unemployment. Simonsen further argued that incomes policy may be deployed to speed up the convergence to Nash equilibria. Simonsen also showed that the condition for a country’s solvency is that the rate of growth of its exports exceeds the rate of interest, advanced a model of bargaining between banks and indebted developing countries, and formulated a cash-in-advance model.
Keywords
- Bargaining
- Cash-in-advance models
- Dornbusch, R
- Dual economies
- Friedman, M
- Game theory
- Incomes policies
- Inertial inflation
- Inflation
- Inflationary expectations
- Inflation–unemployment trade-off
- Kuhn–Tucker theorem
- Money-in-utility function
- Nonlinear programming
- Price indexation
- Risk aversion
- Simonsen curve
- Simonsen, M. H
- Sovereign debt
- Staggered wages
- Structural unemployment
- Wage indexation
- Wage rigidities
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Boianovsky, M. (2018). Simonsen, Mario Henrique (1935–1997). In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2173
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2173
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