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Transferências Voluntárias e Ciclo Político-Orçamentário no Federalismo Fiscal Brasileiro

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  • Bugarin, Mauricio Soares
  • Ferreira, Ivan Fecury

Abstract

This article presents an econometric study suggesting that intergovernmental transfers to Brazilian municipalities are strongly partisan motivated. In light of that stylized fact, it develops an extension to Rogoff (1990)’s model to analyze the effect of partisan motivated transfers into sub-national electoral and fiscal equilibria. The main finding is that important partisan transfers may undo the positive selection aspect of political budget cycles. Indeed, partisan transfers may, on one hand, eliminate the political budget cycle, solving a moral hazard problem, but, on the other hand, they may retain an incompetent incumbent in office, bringing about an adverse selection problem.

Suggested Citation

  • Bugarin, Mauricio Soares & Ferreira, Ivan Fecury, 2007. "Transferências Voluntárias e Ciclo Político-Orçamentário no Federalismo Fiscal Brasileiro," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 61(3), March.
    • Handle: RePEc:fgv:epgrbe:v:61:y:2007:i:3:a:1087
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    File URL: https://periodicos.fgv.br/rbe/article/view/1087
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    Cited by:

    1. Rodrigo Octávio Orair & Raphael Rocha Gouvêa & Ésio Moreira Leal, 2014. "Political Electoral Cycles and Public Investments in Brasil," Discussion Papers 1999a, Instituto de Pesquisa Econômica Aplicada - IPEA.
    2. Klein, Fabio Alvim & Sakurai, Sergio Naruhiko, 2015. "Term limits and political budget cycles at the local level: evidence from a young democracy," European Journal of Political Economy, Elsevier, vol. 37(C), pages 21-36.
    3. Sergio Naruhiko Sakurai & Maria Isabel Accoroni Theodoro, 2020. "On the relationship between political alignment and government transfers: triple differences evidence from a developing country," Empirical Economics, Springer, vol. 58(3), pages 1107-1141, March.
    4. Diogo Baerlocher & Rodrigo Schneider, 2021. "Cold bacon: co-partisan politics in Brazil," Public Choice, Springer, vol. 189(1), pages 161-182, October.
    5. Pablo Garofalo & Daniel Lema & Jorge M. Streb, 2016. "Party alignment, political budget cycles and vote within a federal country," CEMA Working Papers: Serie Documentos de Trabajo. 601, Universidad del CEMA, revised May 2017.
    6. Daniel Lema & Jorge M. Streb, 2013. "Party alignment and political budget cycles: the Argentine provinces," CEMA Working Papers: Serie Documentos de Trabajo. 520, Universidad del CEMA.
    7. Jorge Ferreira & Alexandre Alves & Emilie Caldeira, 2016. "Elections and externalities of health expenditures: Spatial patterns and opportunism in the local budget allocation," ERSA conference papers ersa16p933, European Regional Science Association.
    8. Rafael Alves de Albuquerque Tavares, 2017. "Does Political Party Matter? Evidence from Close Races for Mais Médicos para o Brasil," Working Papers, Department of Economics 2017_05, University of São Paulo (FEA-USP).
    9. Rodrigo Schneider & Diloá Athias & Mauricio Bugarin, 2019. "Does enfranchisement affect fiscal policy? Theory and empirical evidence on Brazil," Economics of Governance, Springer, vol. 20(4), pages 389-412, December.

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