Fiscal interactions and spillover effects of a federal grant to Brazilian municipalities

Resumo

What is the impact of an unconditional transfer to a municipality when the municipality’s neighbor also receives the transfer? In this paper, we test whether a federal government grant, the Municipalities’ Participation Fund (Fundo de Participa¸c˜ao dos Munic´ıpios - FPM), differently affects municipal expenditures depending on neighbor cities. We use cities near one of the four points of discontinuity in the FPM transfers according to population brackets and with neighbors near different thresholds. We estimate the impacts of own and neighbor FPM using the method of Regression Discontinuity Design (RDD). The results indicate that part of the flypaper effect of FPM on local economies that has been estimated in the literature can be explained by increased spending in neighboring municipalities. The spillover is generally positive, with the exception of spending on health and sanitation in some population groups. We also consider a sample of neighbors that are more distant from the thresholds, and we show that in these cases the differences on estimations when we control for the neighbors’ FPM are not substantial. Ultimately, we find an effect on the neighbor populations that helps clarify the observed FPM correlation in neighboring municipalities.

Ficha do documento

Tipo

Estudo

Ano

2015

Instituição

Escola de Economia de São Paulo

Fonte

Repositório da FGV

Idioma

Português

Acesso

Acesso aberto

Identificador

oai:repositorio.fgv.br:10438/13725

Temas

EconomiaFinanças PúblicasDesenvolvimento RegionalGestão Municipal

Palavras-chave

Fiscal federalismProgram evaluationFiscal spilloverFlypaper e efectEconomiaFundo de participação dos municípiosTransferências de recursos financeiros governamentaisFederalismo