Fiscal policy and the Washington consensus: a Post Keynesian perspective

The debt crisis of the early 1980s prompted several analyses that emphasized the negative role of fiscal deficits on economic development. This negative view of fiscal deficits was consolidated in the "Washington Consensus" agenda. International financial crises--recurrent in a world of true uncertainty with unregulated capital flows and flexible exchange rates--have led to perennial fiscal adjustment. Alternatives to the permanent fiscal adjustment, the main legacy of the Washington Consensus, from a Post Keynesian perspective, are presented. It is emphasized that the notion of the euthanasia of the rentier is a necessary complement to the socialization of investment.