New Directions in Theory and Policy
Edited by Phillip Arestis, Michelle Baddeley and John S.L. McCombie
Chapter 17: Strategy for Economic Growth in Brazil: A Post Keynesian Approach
José L. Oreiro and Luiz Fernando de Paula* 1. INTRODUCTION This chapter 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 the lack of microeconomic reforms (labour market, credit market, and so on), as liberal economists in Brazil have suggested. The chapter is divided into four main sections, besides this introduction. The second section brieﬂy discusses the main features of a new economic strategy (based on demand-side and supply-side policies) that aims to overcome the constraints on sustained economic growth. The third section discusses the current economic constraints on sustained economic growth in Brazil. In the fourth section, a simple version of the Harrod–Domar growth model is utilized in order to obtain the potential growth rate of the brazilian economy. Finally, the ﬁfth section presents a new economic policy model for the brazilian economy, designed to achieve its potential growth rate. This policy should include both demand-side, and supply-side policies. 2. KEYNESIAN ECONOMIC POLICIES: A BRIEF VIEW 2.1. Deﬁnition of Keynesian Economic Policy Contrary to orthodox economics, for which activist economic policies have no permanent eﬀect on the real variables, such as employment and product, * The authors would like to thank Phillip Arestis and G.C. Harcourt for their helpful comments. Financial support of CNPq, PRONEX (FAPERJ/CNPq) and Fundação Araucária is gratefully...
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