Political Institutions, Policymaking Processes and Policy Outcomes in Brazil

88 Pages Posted: 19 Apr 2011

See all articles by Lee J. Alston

Lee J. Alston

Indiana University; National Bureau of Economic Research (NBER)

Marcus Andre Melo

Universidade Federal de Pernambuco (UFPE)

Bernardo Mueller

Universidade de Brasilia

Carlos Pereira

Getulio Vargas Foundation (FGV)

Date Written: March 2006


We found that the driving force behind policies in Brazil is the strong set of powers given to the President by the Constitution of 1988. To have strong powers does not mean unbridled powers. Several institutions constrain and check the power of the President, in particular the legislature, the judiciary, the public prosecutors, the auditing office, state governors and the Constitution itself. The electorate of Brazil holds the President accountable for economic growth, inflation and unemployment. Because of the electoral connection, and perhaps reputational effects, presidents in Brazil have a strong incentive to pursue stable fiscal and monetary policies as their first priority. At least for the past ten years, and particularly in the new administration of Lula, executive power has been aimed at pushing policy towards macro orthodoxy. Although orthodoxy may not lead to short-term growth, international financial markets provide additional incentives for discipline, as deviations are instantly punished, with unfavorable consequences that are readily recognized by the electorate. Achieving stable macro policies required constitutional amendments as well as considerable legislation. To attain their goals, the past administrations (Cardoso and Lula in particular) used their property rights over pork to trade for policy changes. The rationale for members of Congress to exchange votes on policy for pork is that the electorates reward or punish members of Congress based on the degree to which pork lands in their district. With the exception of the devaluation of 1999, macro policy has become more stable over time. We categorize macro policies in Brazil as `stable but adaptable. `

Suggested Citation

Alston, Lee J. and Melo, Marcus André and Mueller, Bernardo and Pereira, Carlos, Political Institutions, Policymaking Processes and Policy Outcomes in Brazil (March 2006). IDB Working Paper No. 204, Available at SSRN: https://ssrn.com/abstract=1814758 or http://dx.doi.org/10.2139/ssrn.1814758

Lee J. Alston

Indiana University ( email )

Wylie Hall
100 South Woodlawn
Bloomington, IN 47408–3895
United States

HOME PAGE: http://https://economics.indiana.edu/about/faculty/alston-lee.html

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Marcus André Melo

Universidade Federal de Pernambuco (UFPE) ( email )

Cidade Universitária
Cidade Universitária, Pernambuco 50670-901

Bernardo Mueller (Contact Author)

Universidade de Brasilia ( email )

Dept. de Economia
Universidade de Brasilia
Brasilia, DF 70910-900
55 61 981110349 (Phone)
55 61 3349-1303 (Fax)

HOME PAGE: http://bpmmueller.wixsite.com/bernardo-mueller

Carlos Pereira

Getulio Vargas Foundation (FGV) ( email )

R. Dr. Neto de Araujo 320 cj 1307
Rio de Janeiro, Rio de Janeiro 22250-900

HOME PAGE: http://ebape.fgv.br/en/faculty-members/carlos-pereira

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