The misleading operating deficit methodology

Álvaro Antônio Zini ()

Brazilian Journal of Political Economy, 1991, vol. 11, issue 3, 418-425

Abstract: The concept of operational deficit is taken by many economists as the relevantconcept of public deficit. It is argued in this paper that the concept is flawed and that itscurrent method- ology of estimation is inadequate. In 1990, for instance, the Governmentdeducted an inflation of 1355% from the nominal deficit (PSBN), but only accounted anexpense of 837% as monetary correction in the expenditure side, to arrive at an estimate ofa 1,2% operational “surplus” over GDP. It is argued that such number is illusory and that abetter alternative is rouse an ex-ante concept of deficit for policy decisions. JEL Classification: H62; H60.

Keywords: Public spending; déficit (search for similar items in EconPapers)
Date: 1991
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