IS THE BRAZILIAN FISCAL RESPONSIBILITY LAW (LRF) REALLY BINDING? EVIDENCE FROM STATE-LEVEL GOVERNMENT

Rafael Barroso and Romero Rocha

Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32th Brazilian Economics Meeting] from ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]

Abstract: The adoption of a set of fiscal and budgetary institutions for a better macroeconomic performance has been gathering support in various governments. This article states that Institutions matters and adopts the New Institutional Economics framework in its approach. After a brief review of the literature and introduction to the Brazilian case, it poses the following question: Is the LRF really binding in restraining state's indebtedness? The institutional theory, which backed up the formulation of the LRF, would provide a positive answer to this question. This article therefore investigates if this relation is sustained empirically. For this purpose an econometric model with panel data on state-level government is estimated including a dummy variable for the adoption of the LRF and accounting for other explanatory variables as well.

JEL-codes: B52 C23 (search for similar items in EconPapers)
Date: 2004
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