Proposal of economic policy for the financing of public investment in Brazil

Abstract

This paper aims to discuss an alternative, but still preliminary, proposal of economic policy aimed at resuming public investment in Brazil from the use of surplus foreign exchange reserves. Based on the Principle of Effective Demand, it is understood that public investment assumes a strategic function in the economy by generating stimuli on demand and assembled supply. However, it is observed that this variable not always receives the appropriate priority and ends up being submitted to cuts in the context of fiscal adjustment. Therefore, Brazilian public investment rates behave in cycles, with a recent inflection into a downward trend that led the level of investment to levels that are similar to those from the mid-1990s. Due to the consensus in favor of a fiscal adjustment without tax increases and international reserves being above the level considered suitable, there is a proposal about using foreign exchange surpluses to finance public investment in Brazil.