Fiscal decentralization and economic growth: evidence from Brazilian states

Pedro Jorge Holanda Figueiredo Alves (), Jevuks Araujo and Ana Karolina Acris Melo ()
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Pedro Jorge Holanda Figueiredo Alves: Catholic University of Brasilia, QS 07, Lote 01, Taguatinga Sul - Taguatinga, BrasĂ­lia - DF, 71966-700
Ana Karolina Acris Melo: Federal University of Paraiba, Campus I Lot, Cidade Universitaria, PB, 58051-900

Public Sector Economics, 2023, vol. 47, issue 2, 255-280

Abstract: This paper investigates the relationship between fiscal decentralization and economic growth in Brazilian states from 1996 to 2015. Using five decentralization measures and the GMM-System model to address the endogeneity problem, we have identified a positive relationship between the indicators of fiscal decentralization and economic growth and observed that the industry and service sectors are the most affected by this decentralization. Our results suggest that local governments with more autonomy make states more efficient, thus increasing economic growth.

Keywords: decentralization; economic growth; Brazilian states; GMM-System (search for similar items in EconPapers)
JEL-codes: H7 H77 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ipf:psejou:v:47:y:2023:i:2:p:255-280

DOI: 10.3326/pse.47.2.5

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