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Rules vs. political discretion: evidence from constitutionally guaranteed transfers to local governments in Brazil

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Author Info
Stephan Litschig ()
Abstract

Can rules be used to shield public resources from political interference? The Brazilian constitution and national tax code stipulate that revenue sharing transfers to municipal governments be determined by the size of counties in terms of estimated population. In this paper I document that the population estimates which went into the transfer allocation formula for the year 1991 were manipulated, resulting in significant transfer differentials over the entire 1990’s. I test whether conditional on county characteristics that might account for the manipulation, center-local party alignment, party popularity and the extent of interparty fragmentation at the county level are correlated with estimated populations in 1991. Results suggest that revenue sharing transfers were targeted at right-wing national deputies in electorally fragmented counties as well as aligned local executives.

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File URL: http://www.econ.upf.edu/docs/papers/downloads/1144.pdf
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Publisher Info
Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1144.

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Date of creation: Aug 2008
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Handle: RePEc:upf:upfgen:1144

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Related research
Keywords: Bureaucracy; institutions; redistributive politics; electoral competition;

Find related papers by JEL classification:
H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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This page was last updated on 2009-11-27.

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