IDEAS home Printed from https://ideas.repec.org/p/spa/wpaper/2014wpecon2.html
   My bibliography  Save this paper

Oil windfalls and tax inefficiency: evidence from Brazil

Author

Listed:
  • Fernando Antonio Slaibe Postali

    ()

Abstract

This paper investigates whether Brazilian municipalities are losing efficiency when collecting local taxes in response to oil windfalls. A two-stage procedure was adopted. First, we calculate the efficiency scores for tax collection using the Data Envelopment Analysis (DEA) method. In the second stage, the efficiency scores are used as the dependent variable in a quantile regression model to assess whether oil rents affect this indicator. The results reveal that the municipalities benefitting from oil revenues (royalties) reduce their efficiency in collecting taxes in response to such grants, which signals that they generate some type of X-inefficiency in municipal public management. Using a Cost-Minimization DEA, it is possible to avoid the problem of mixing technical efficiency with unobservable preferences on public goods. It is also possible to decompose efficiency within three components: technical, allocative and economic.

Suggested Citation

  • Fernando Antonio Slaibe Postali, 2014. "Oil windfalls and tax inefficiency: evidence from Brazil," Working Papers, Department of Economics 2014_02, University of São Paulo (FEA-USP).
  • Handle: RePEc:spa:wpaper:2014wpecon2
    as

    Download full text from publisher

    File URL: http://www.repec.eae.fea.usp.br/documentos/FernandoPostali02WP.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. De Borger, Bruno & Kerstens, Kristiaan, 1996. "Cost efficiency of Belgian local governments: A comparative analysis of FDH, DEA, and econometric approaches," Regional Science and Urban Economics, Elsevier, vol. 26(2), pages 145-170, April.
    2. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731, April.
    3. Balaguer-Coll, Maria Teresa & Prior, Diego & Tortosa-Ausina, Emili, 2007. "On the determinants of local government performance: A two-stage nonparametric approach," European Economic Review, Elsevier, vol. 51(2), pages 425-451, February.
    4. Button, Kenneth J & Weyman-Jones, Thomas G, 1994. "X-Efficiency and Technical Efficiency," Public Choice, Springer, vol. 80(1-2), pages 83-104, July.
    5. Frantz, Roger, 1992. "X-Efficiency and Allocative Efficiency: What Have We Learned?," American Economic Review, American Economic Association, vol. 82(2), pages 434-438, May.
    6. de Sousa, Maria da Conceição Sampaio & Ramos, Francisco S., 1999. "Eficiência Técnica e Retornos de Escala na Produção de Serviços Públicos Municipais: o Caso do Nordeste e do Sudeste Brasileiros," Revista Brasileira de Economia - RBE, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 53(4), October.
    7. Ferrier, Gary D. & Lovell, C. A. Knox, 1990. "Measuring cost efficiency in banking : Econometric and linear programming evidence," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 229-245.
    8. Maria Sousa & Borko Stošić, 2005. "Technical Efficiency of the Brazilian Municipalities: Correcting Nonparametric Frontier Measurements for Outliers," Journal of Productivity Analysis, Springer, vol. 24(2), pages 157-181, October.
    9. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    10. McNutt, Patrick A, 1993. "Rent-Seeking and X-Inefficiency," Public Choice, Springer, vol. 75(4), pages 371-378, April.
    11. Robert P. Inman, 2008. "The Flypaper Effect," NBER Working Papers 14579, National Bureau of Economic Research, Inc.
    12. Qi Li & Jeffrey Scott Racine, 2006. "Nonparametric Econometrics: Theory and Practice," Economics Books, Princeton University Press, edition 1, number 8355.
    13. Button, Kenneth J & Weyman-Jones, Thomas G, 1992. "Ownership Structure, Institutional Organization and Measured X-Efficiency," American Economic Review, American Economic Association, vol. 82(2), pages 439-445, May.
    14. Stigler, George J, 1976. "The Xistence of X-Efficiency," American Economic Review, American Economic Association, vol. 66(1), pages 213-216, March.
    15. repec:sbe:breart:v:25:y:2005:i:2:a:2507 is not listed on IDEAS
    16. Leibenstein, Harvey & Maital, Shlomo, 1992. "Empirical Estimation and Partitioning of X-Inefficiency: A Data-Envelopment Approach," American Economic Review, American Economic Association, vol. 82(2), pages 428-433, May.
    17. Deller, Steven C, 1992. "Production Efficiency in Local Government: A Parametric Approach," Public Finance = Finances publiques, , vol. 47(1), pages 32-44.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Data envelopment analysis; quantile regression; oil royalties; public sector;

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spa:wpaper:2014wpecon2. 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: (Pedro Garcia Duarte). General contact details of provider: http://edirc.repec.org/data/deuspbr.html .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.