Political budget cycles in a fiscal federationthe effect of partisan voluntary transfers

Resumo

This article first presents an econometric study suggesting that intergovernmental transfers to Brazilian municipalities are strongly partisan motivated. In light of that stylized fact, it develops an extension to Rogoff (1990)’s model to analyze the effect of partisan motivated transfers into sub-national electoral and fiscal equilibria. The main finding is that important partisan transfers may undo the positive selection aspect of political budget cycles. Indeed, partisan transfers may, on one hand, eliminate the political budget cycle, solving a moral hazard problem, but, on the other hand, they may retain an incompetent incumbent in office, bringing about an adverse selection problem.

Ficha do documento

Tipo

Estudo

Ano

2006

Instituição

Escola de Pós-Graduação em Economia da FGV

Fonte

Repositório da FGV

Idioma

Inglês

Acesso

Não informado

Identificador

oai:repositorio.fgv.br:10438/12444

Temas

EconomiaFinanças Públicas

Palavras-chave

Fiscal federalism, partisan transfers, Political budget cyclesEconomiaEleições - Modelos econométricosRelações fiscais intergovernamentais - Modelos econométricosCiclos econômicos - Modelos econométricos