Who Is Punishing Corrupt Politicians – Voters or the Central Government? Evidence from the Brazilian Anti-Corruption Program

Fernanda Brollo ()

No 336, Working Papers from IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University

Abstract: In 2003 the Brazilian central government (CG) launched an anti-corruption program. Since then municipalities have been randomly selected to be audited on a monthly basis. Evidence in the literature suggests that the probability of re-election of an incumbent mayor decreases as the number of corruption violations reported rises before the municipal elections. By exploiting the exogenous variation in the release of the audit reports and the Brazilian institutional scheme, this paper sheds light on the mechanisms through which the Brazilian anti-corruption program acts. After the release of the audit reports, municipalities where more than two corruption violations were reported receive 26% fewer transfers from the CG. However, municipalities where the mayor is aliated with the political party of the president are not punished. The eects of the dissemination of corruption information on the probability of re-election of incumbent mayors seem to gradually disappear with time. Yet, when these eects have completely faded and voter had time to feel the consequences of receiving fewer transfers, the probability of reelection of corrupt politicians decreases as a consequence of the reduction in transfers.

Date: 2008
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