Tying Your Enemy's Hands in Close Races: The Politics of Federal Transfers in Brazil

49 Pages Posted: 17 May 2011

See all articles by Fernanda Brollo

Fernanda Brollo

University of Warwick - Department of Economics

Tommaso Nannicini

Bocconi University - Department of Economics; IZA Institute of Labor Economics

Abstract

This paper uses a quasi-experimental strategy to disclose utterly political reasons behind the allocation of intergovernmental transfers in a federal state. We apply a regression discontinuity design in close elections to identify the effect of political alignment on federal transfers to municipal governments in Brazil. We find that municipalities where the mayor is affiliated with the coalition of the Brazilian President receive larger (discretionary) infrastructure transfers by about 40% in pre-election years. This effect is mainly driven by the fact that the federal government penalizes municipalities run by mayors from the opposition coalition who won by a narrow margin, thereby tying their hands for the next election.

Keywords: federal transfers, political alignment, regression discontinuity

JEL Classification: C21, D72, H77

Suggested Citation

Brollo, Fernanda and Nannicini, Tommaso, Tying Your Enemy's Hands in Close Races: The Politics of Federal Transfers in Brazil. IZA Discussion Paper No. 5698, Available at SSRN: https://ssrn.com/abstract=1842095 or http://dx.doi.org/10.2139/ssrn.1842095

Fernanda Brollo (Contact Author)

University of Warwick - Department of Economics ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

Tommaso Nannicini

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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