Luiz Carlos Bresser-Pereira e Fernando Maida Dall'Acqua
Revista de Economia Política 7(2), abril-junho 1987: 54-65. Republicado em Ernesto Lozardo,org., Déficit Público Brasileiro, Rio de Janeiro: Paz e Terra, 1988.
An increase of the public deficit will have a bigger or smaller impact on aggregate demand depending on its real or financial origin. Interest expenditures and real state expenditures have different consequences on aggregate demand. Starting form these hypothesis this paper criticizes the conventional theory about public deficit and presents an alternative model of macroeconomic analysis of the effects of the public deficit emphasizing its internal composition between interests and real expenditures. A contry may have a public deficit whose origin are the interests paid consistent with insufficient demand and unemployment. This was what occurred in the Brazilian economy in 1985.
