IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Intergovernmental transfers and public spending in Brazilian municipalities

Listed author(s):
  • Arvate, Paulo Roberto
  • Mattos, Enlinson
  • Rocha, Fabiana

We estimate the effects of unconditional (full fiscal decentralization) versus conditional (partial fiscal decentralization) block grants on local public spending in Brazilian municipalities. Our results suggest that the effect of unconditional and conditional transfers do not differ statistically. Their combination promotes a full crowding-in effect on aggregate public spending — i.e., for $1 of unconditional and conditional grant receipts; we find $1 of additional local public expenditures, greater than the corresponding effect of local income, providing further evidence for the flypaper effect. Moreover, the effect of unconditional transfers on education (health) spending is smaller than the effect of conditional education (health) transfers but greater than the corresponding effect of local income. We consider four strategies to identify causal effects of federal grants and the local income on fiscal responses regarding Brazilian local governments: (i) a fuzzy regression discontinuity design, (ii) Redistributive rules of education funds, (iii) Oil and Gas production, and (iv) Rainfall deviations from the historical mean.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://bibliotecadigital.fgv.br/dspace/bitstream/10438/13465/5/TD%20377%20-%20Paulo%20Arvate%20-%20Enlinson%20Mattos%20-%20Fabiana%20Rocha.pdf
Download Restriction: no

Paper provided by FGV/EESP - Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil) in its series Textos para discussão with number 377.

as
in new window

Length:
Date of creation: 02 Mar 2015
Handle: RePEc:fgv:eesptd:377
Contact details of provider: Postal:
Rua Itapeva, 474, 13o andar, CEP 01332-000, São Paulo - SP

Phone: 55 (011) 3799-3350
Fax: 55 (011) 3799-3357
Web page: http://eesp.fgv.br
Email:


More information through EDIRC

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.:

as
in new window


  1. János Kornai, 2014. "The soft budget constraint," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 64(supplemen), pages 25-79, November.
  2. Hamilton, Jonathan H., 1986. "The flypaper effect and the deadweight loss from taxation," Journal of Urban Economics, Elsevier, vol. 19(2), pages 148-155, March.
  3. Gordon, Nora, 2004. "Do federal grants boost school spending? Evidence from Title I," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1771-1792, August.
  4. McGuire, Martin, 1978. "A method for estimating the effect of a subsidy on the receiver's resource constraint: with an application to U.S. local governments 1964-1971," Journal of Public Economics, Elsevier, vol. 10(1), pages 25-44, August.
  5. Litschig, Stephan, 2012. "Are rules-based government programs shielded from special-interest politics? Evidence from revenue-sharing transfers in Brazil," Journal of Public Economics, Elsevier, vol. 96(11), pages 1047-1060.
  6. Fernanda Brollo & Tommaso Nannicini & Roberto Perotti & Guido Tabellini, 2013. "The Political Resource Curse," American Economic Review, American Economic Association, vol. 103(5), pages 1759-1796, August.
  7. Edward M. Gramlich & Harvy Galper, 1973. "State and Local Fiscal Behavior and Federal Grant Policy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 4(1), pages 15-66.
  8. Francesco Caselli & Guy Michaels, 2013. "Do Oil Windfalls Improve Living Standards? Evidence from Brazil," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 208-238, January.
  9. Kosec, Katrina, 2014. "Relying on the private sector: The income distribution and public investments in the poor," Journal of Development Economics, Elsevier, vol. 107(C), pages 320-342.
  10. Imbens, Guido W. & Lemieux, Thomas, 2008. "Regression discontinuity designs: A guide to practice," Journal of Econometrics, Elsevier, vol. 142(2), pages 615-635, February.
  11. Steven Craig & Robert P. Inman, 1986. "Education, Welfare and the "New" Federalism: State Budgeting in a Federalist Public Economy," NBER Chapters,in: Studies in State and Local Public Finance, pages 187-228 National Bureau of Economic Research, Inc.
  12. Heléne Lundqvist, 2015. "Granting public or private consumption? Effects of grants on local public spending and income taxes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(1), pages 41-72, February.
  13. Hamilton, Bruce W., 1983. "The flypaper effect and other anomalies," Journal of Public Economics, Elsevier, vol. 22(3), pages 347-361, December.
  14. Claudio Ferraz & Frederico Finan, 2011. "Electoral Accountability and Corruption: Evidence from the Audits of Local Governments," American Economic Review, American Economic Association, vol. 101(4), pages 1274-1311, June.
  15. Bev Dahlby, 2011. "The marginal cost of public funds and the flypaper effect," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(3), pages 304-321, June.
  16. Stephan Litschig & Kevin M. Morrison, 2013. "The Impact of Intergovernmental Transfers on Education Outcomes and Poverty Reduction," American Economic Journal: Applied Economics, American Economic Association, vol. 5(4), pages 206-240, October.
  17. Kornai, J, 1979. "Resource-Constrained versus Demand-Constrained Systems," Econometrica, Econometric Society, vol. 47(4), pages 801-819, July.
  18. Becker, Elizabeth, 1996. "The Illusion of Fiscal Illusion: Unsticking the Flypaper Effect," Public Choice, Springer, vol. 86(1-2), pages 85-102, January.
  19. David F. Bradford & Wallace E. Oates, 1971. "The Analysis of Revenue Sharing in a New Approach to Collective Fiscal Decisions," The Quarterly Journal of Economics, Oxford University Press, vol. 85(3), pages 416-439.
  20. Mark McGillivray & Oliver Morrissey, 2000. "Aid fungibility in Assessing Aid: red herring or true concern?," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 413-428, 04.
  21. Feldstein, Martin S, 1975. "Wealth Neutrality and Local Choice in Public Education," American Economic Review, American Economic Association, vol. 65(1), pages 75-89, March.
  22. Byron Lutz, 2010. "Taxation with Representation: Intergovernmental Grants in a Plebiscite Democracy," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 316-332, May.
  23. Filimon, Radu & Romer, Thomas & Rosenthal, Howard, 1982. "Asymmetric information and agenda control : The bases of monopoly power in public spending," Journal of Public Economics, Elsevier, vol. 17(1), pages 51-70, February.
  24. Brian Knight, 2002. "Endogenous Federal Grants and Crowd-out of State Government Spending: Theory and Evidence from the Federal Highway Aid Program," American Economic Review, American Economic Association, vol. 92(1), pages 71-92, March.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:fgv:eesptd:377. 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: (Núcleo de Computação da FGV/EPGE)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.