Aspectos Dinâmicos De Um Sistema De Metas Sociais
The present paper develops variants of a system of social targets departing from principal-agent models incorporating different possibilities of renegotiation across time periods, as well as the presence of shocks. This system acts as a way for the federal government to increase efficiency in the use of its social budget transferred to municipalities.We demonstrate in a dynamic context with complete contracts that the best way to increase allocative efficiency in funds transfers would be to create institutional mechanisms denying the possibility of bilateral renegotiations. This optimum contract reproduces sequence targets and transfers found in the solution of the static model for various periods. However, this result disappears when we incorporate incomplete contracts. In this case, ex-ante inefficiencies created by the possibility of renegotiation must be weighted against ex-post inefficiencies created by not using the disclosed new information along of process.In the second part of the paper we incorporate the incidence of random shocks. We show that, when the social results do not depend only on the investments carried through by the municipality, but also random factors, the contract established between federal government and municipalities, must stipulate higher social targets to compensate the occurrence of bad states of the nature. Moreover, in this kind of situation, linear contracts are pro-cyclical, reducing governmental transfers exactly when the municipality suffers a negative shock. To avoid this type of situation, we show that the establishment of contracts that use mechanisms of comparison of performance between the municipalities eliminates the pro-cyclical effect.
|Date of creation:||2004|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 55 21 2709 7154
Web page: http://www.anpec.org.brEmail:
More information through EDIRC
|Order Information:|| Postal: Secretaria da ANPEC Rua Tiradentes, 17 - Ingá Niterói, RJ 24210-510 Brazil|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gelbach, Jonath B. & Pritchett, Lant H., 1997. "More for the poor is less for the poor : the politics of targeting," Policy Research Working Paper Series 1799, The World Bank.
- Jean-Jacques LAFFONT & Jean TIROLE, 1990.
"Adverse Selection and Renegotiation in Procurement,"
Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP)
9005, Université de Lausanne, Faculté des HEC, DEEP.
- Laffont, Jean-Jacques & Tirole, Jean, 1990. "Adverse Selection and Renegotiation in Procurement," Review of Economic Studies, Wiley Blackwell, vol. 57(4), pages 597-625, October.
- Laffont, Jean-Jacques & Tirole, Jean., 1988. "Adverse Selection and Renegotiation in Procurement," Working Papers 665, California Institute of Technology, Division of the Humanities and Social Sciences.
- Neri, Marcelo Cortes & Xerez, Marcelo Casal de, 2004.
"Desenho de um sistema de metas sociais,"
Economics Working Papers (Ensaios Economicos da EPGE)
565, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
- Neri, Marcelo Cortes & Xerez, Marcelo Casal de, 2003. "Desenho de um sistema de metas sociais," Economics Working Papers (Ensaios Economicos da EPGE) 519, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
- Marcelo Côrtes Néri & Marcelo Casal Xerez, 2003. "Desenho de um Sistema de Metas Sociais," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31th Brazilian Economics Meeting] b18, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
- Azam, Jean-Paul & Laffont, Jean-Jacques, 2003. "Contracting for aid," Journal of Development Economics, Elsevier, vol. 70(1), pages 25-58, February.
- Laffont, Jean-Jacques & Tirole, Jean, 1988.
"The Dynamics of Incentive Contracts,"
Econometric Society, vol. 56(5), pages 1153-75, September.
- Laffont, Jean-Jacques & Tirole, Jean, 1987. "Comparative statics of the optimal dynamic incentive contract," European Economic Review, Elsevier, vol. 31(4), pages 901-926, June.
- C. S. Adam & S. A. O'Connell, 1999. "Aid, Taxation and Development in Sub-Saharan Africa," Economics and Politics, Wiley Blackwell, vol. 11(3), pages 225-253, November.
- Dewatripont, Mathias, 1989.
"Renegotiation and Information Revelation over Time: The Case of Optimal Labor Contracts,"
The Quarterly Journal of Economics,
MIT Press, vol. 104(3), pages 589-619, August.
- Mathias Dewatripont, 1989. "Renegotiation and information revelation over time: the case of optimal labor contacts," ULB Institutional Repository 2013/9573, ULB -- Universite Libre de Bruxelles.
When requesting a correction, please mention this item's handle: RePEc:anp:en2004:055. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Hugo E. A. da Gama Cerqueira)
If references are entirely missing, you can add them using this form.