Resumo

WRAY, L. Randall. Re-examining the economics of debt costs. Economía UNAM [online]. 2020, vol.17, n.50, pp.27-52.  Epub 22-Dez-2020. ISSN 1665-952X.  https://doi.org/10.22201/fe.24488143e.2020.50.518.

The article analyzes the behavior of fiscal policy from the perspective of Modern Money Theory (MMT), for which the fiscal deficit does not matter. This represents a net injection of spending in the economy and generates surpluses from the private sector (keeping the balance of the external sector constant). It is not possible to speak of reducing the fiscal deficit without considering the balance of the private and external sectors. If the economy has a current account deficit in the balance of payments and the private sector has financial problems and it is not investing, reducing the fiscal deficit leads the economy to recession. Attempts to reduce the fiscal deficit can be counterproductive, since they decrease GDP growth, such as tax revenues, and increase the payment of transfers, which increases the fiscal deficit and the debt ratio. To reduce the public deficit, the primary surplus must be reduced and a current account deficit must be reduced to boost growth, which increases tax revenues and reduces transfer payments.

Palavras-chave : E; E52; E61; E62; P16; Macroeconomics And Monetary; Economics; Monetary Policy; Policy Objectives; Fiscal Policy; Political Economy of Capitalism.

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