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Is The Brazilian Fiscal Responsibility Law (Lrf) Really Binding? Evidence From State-Level Government


  • Rafael Barroso
  • Romero Rocha


The adoption of a set of fiscal and budgetary institutions for a better macroeconomic performance has been gathering support in various governments. This article states that Institutions matters and adopts the New Institutional Economics framework in its approach. After a brief review of the literature and introduction to the Brazilian case, it poses the following question: Is the LRF really binding in restraining state's indebtedness? The institutional theory, which backed up the formulation of the LRF, would provide a positive answer to this question. This article therefore investigates if this relation is sustained empirically. For this purpose an econometric model with panel data on state-level government is estimated including a dummy variable for the adoption of the LRF and accounting for other explanatory variables as well.

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  • Rafael Barroso & Romero Rocha, 2004. "Is The Brazilian Fiscal Responsibility Law (Lrf) Really Binding? Evidence From State-Level Government," Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32nd Brazilian Economics Meeting] 024, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
  • Handle: RePEc:anp:en2004:024

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    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models


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