Rules vs. political discretion: evidence from constitutionally guaranteed transfers to local governments in Brazil

Stephan Litschig ()
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Stephan Litschig: http://www.econ.upf.edu/en/people/onefaculty.php?id=p4131

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: Can rules be used to shield public resources from political interference? The Brazilian constitution and national tax code stipulate that revenue sharing transfers to municipal governments be determined by the size of counties in terms of estimated population. In this paper I document that the population estimates which went into the transfer allocation formula for the year 1991 were manipulated, resulting in significant transfer differentials over the entire 1990’s. I test whether conditional on county characteristics that might account for the manipulation, center-local party alignment, party popularity and the extent of interparty fragmentation at the county level are correlated with estimated populations in 1991. Results suggest that revenue sharing transfers were targeted at right-wing national deputies in electorally fragmented counties as well as aligned local executives.

Keywords: Bureaucracy; institutions; redistributive politics; electoral competition (search for similar items in EconPapers)
JEL-codes: H77 D72 D73 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-pbe and nep-pol
Date: 2008-08

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Persistent link: http://EconPapers.repec.org/RePEc:upf:upfgen:1144

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