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Grants for Whom and Why? The Politics of Allocation of Transfers in Brazil

Jorge L D. Ferreira, Alexandre F. Alves and Emilie Caldeira

The Developing Economies, 2021, vol. 59, issue 1, 39-63

Abstract: This study discusses political and electoral reasons for the allocation of intergovernmental transfers in a federal state. We tested the influence of political alignment with the federal government and deputies, and the effects of elections and changes in alliance status upon Brazilian discretionary transfers. We performed a panel data analysis encompassing 2,856 municipalities from 1999 to 2011. The results suggest that the federal government buys support in Congress by awarding grants to deputies. Moreover, the alignment between the municipal and federal chief executives is central to the allocation of grants, and a negative correlation exists when the mayor is affiliated with an opposition party and when an opposition deputy has a strong support base within the municipality. Furthermore, changes in alliance status between the budget‐voting and budget‐implementation stages influence the number of transfers. The federal government also increased the allocation of grants in years featuring municipal and federal elections, particularly the latter.

Date: 2021
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Handle: RePEc:bla:deveco:v:59:y:2021:i:1:p:39-63