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Federalism and subnational indebtedness

Author

Listed:
  • Mônica Mora
  • Fabio Giambiagi

Abstract

The subnational debt in Brazil was marked by successive bailouts by the federal government. The path of subnational debt induced some locals and state authorities to claim for further renegotiations. More specifically, some governors and mayors demanded a revision of the refinancing contracts. This article intends to present arguments sustained by simulations of the evolution of the path of the subnational debt, denying the necessity of changes in legal framework which rules the state debt. The first section consists of a brief overview. The following section treats of the institutional framework designed to safeguard the fiscal intertemporal balance. In the third section, the implications of new institutional framework on the subnational debt are approached; in the fourth, the possible causes that distorted the expected path of the debt are discussed. The fifth section analyzes the future perspectives for the debt in general terms and focuses some specific cases, while the sixth section discusses the problem under a federal optics. Finally, the conclusion is presented. JEL Classification: H74; H77; H63.

Suggested Citation

  • Mônica Mora & Fabio Giambiagi, 2007. "Federalism and subnational indebtedness," Brazilian Journal of Political Economy, Center of Political Economy, vol. 27(3), pages 472-494.
    • Handle: RePEc:ekm:repojs:v:27:y:2007:i:3:p:472-494:id:576
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    More about this item

    Keywords

    Federalism; subnational debt; intergovernmental relations;
    All these keywords.

    JEL classification:

    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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