Orthodoxy and heterodoxy in the economy: a debate about the consequences of the act that limits brazilian public spending

Abstract

This paper provides an analysis of the debate between orthodox and heterodox Economists about the limit imposed on Brazilian public spending, which was proposed by the Government in 2016. The aim is to indicate the consequences of this act for the two groups of Economists. Orthodox economists attribute the government's excessive spending to the public deficit and, in order to alleviate it, advocate cutbacks in spending. On the other hand, according to the heterodox analysis, the fiscal deficit of the Brazilian economy refers to a revenue problem, and it needs to be increased through tax collection to mitigate the deficit. Heterodox economists argue that the restriction on spending, as well as investment, advocated by the orthodox harms the economy, mainly due to the multiplier linked to public spending that is significant. It deduces that the debate among these two Economists groups is in accordance with the principles of the groups indicated in the literature. It understands that this dispute makes it impossible to reach a consensus about the consequences of the act that limits public spending and it suggests the adoption of the pluralist method in order to appease the debate.