Luiz Fernando de Paula

Strategy for Economic Growth in Brazil: a Post Keynesian Approach

The paper proposes a Keynesian strategy for economic policy that aims to achieve higher, stable and sustained economic growth in Brazil. Its main hypothesis is that the current poor growth performance of the Brazilian economy is due to macroeconomic and structural constraints rather than to the lack of microeconomic reforms.

UMA ESTRATÉGIA KEYNESIANA PARA A SUSTENTABILIDADE DE LONGO PRAZO DA DÍVIDA PÚBLICA

Resumo: Este artigo objetiva analisar as condicoes necessarias para a sustentabilidade de longo prazo da divida publica interna. Para tanto, apresenta uma alternativa keynesiana de longo prazo (ate 2011) para superacao do problema do endividamento publico, que garanta tanto a sua sustentabilidade quanto um maior crescimento economico para o pais, baseada nas seguintes premissas: taxa de inflacao media de 8,5% a.a., taxa real de juros de 6,0% a.a., crescimento real do PIB de 4,5% a.a. e superavit primario de 3,0% do PIB. Esta proposta e contraposta a estrategia chamada de conservadora, inspirada nas concepcoes da equipe economica do Governo Lula.

Arestis and Sawyer's criticism on the New Consensus Macroeconomics: Some issues related to emerging countries +

As is well known, the New Consensus Macroeconomic (NCM) can be characterized as an extension of the New Keynesian Theory. The New Keynesian Theory was developed in the 1980s and aimed at presenting a theoretical framework to explain what the New Keynesians believe to be the essential aspect of Keynes’s General Theory: the existence of price and wage rigidities. For instance, according to Mankiw and Romer (1991, p.1), ‘[b]ecause wage and price rigidities are often viewed as central to Keynesian economics, much effort was aimed at showing how these rigidities arise from the microeconomics of wage and price setting’.

The Impact of the Great Recession and Policy Responses in Latin America: Was This Time Different?

The 2007–08 international financial crisis and the ‘Great Recession’ (GR) affected the different regions of the world, including the emerging economies. In the case of most of the major economies of Latin America, the reduction of public external debt, the previous policy of international reserves accumulation and the reduction and improvement in the composition of public debt provided some policy space for the introduction of counter-cyclical policies. Consequently, governments could make use of counter-cyclical fiscal policy to face up to the effects of the IFC and GR, when on other occasions they made use of tightened policies. The countries’ reaction to the crisis has varied with the use of different tools of economic policy. For instance, between 2011 and 2013, despite the operation of counter-cyclical policies, the economic growth showed great volatility in the economies of the region. In addition, there are a lot of concerns about the future performance of the economies of the region due mainly to the uncertainties related to the global economy.

The 2008 Financial Crisis and Banking Regulation in Brazil

The Brazilian economy was severely affected by the 2008 crisis. At the beginning of the crisis, the overwhelming majority of economic agents and authorities thought that Brazil could face some sort of decoupling since many of its macroeconomic fundamentals were very good. What we saw, however, was that the Brazilian economy was not decoupled, and expectations faced a huge deterioration soon after the bankruptcy of Lehman Brothers on 15 September. Two aspects regarding the impact of the crisis in Brazil, however, deserve considerable attention: (i) although deep, the impact did not last long. Actually, the GDP growth experienced a good recovery in the second quarter of 2009, showing the reaction of the Brazilian economy (ii) the Brazilian banking system performed very well during the crisis, although we cannot say the system was not in danger at the worst time of the crisis. In this aspect, it is interesting to mention the fact that the system showed a great deal of resilience. In our opinion, the restructuring faced by the banking system in the aftermath of the Real Plan, the development of a solid banking supervision regulation and the government’s management of public debt as part of the macroeconomic policy used to face the external crises was very helpful in allowing the system to avoid the systemic crisis that was a clear possibility to the Brazilian banking system in the beginning of 2009.