Do Parties Matter? Party Affiliation and Fiscal Behavior in Brazilian Municipalities
Posted: 15 Jun 2013
Date Written: June 12, 2013
What is the importance of political parties for the fiscal behavior of subnational governments in Brazil? Existing studies have found little or no effect of political affiliation on spending patterns. We argue that the nonresults are due to methodological limitations, case selection, and an inappropriate understanding of the budget process at the local level. In particular, existing studies (i) focus on state level politics, ignoring substantial variation at the municipal level, (ii) use pooled regression designs, ignoring political budget cycles and incumbency effects, and (iii) focus on parts of the state budgets concerned with social policies that are regulated by federal legislation. We improve on these studies by using changes in mayoral party affiliation across all 5500 municipalities to estimate the partisan effect on fiscal behavior in both federally regulated and unregulated budget areas.
Keywords: Political Parties, Public Expenditures, Brazil, Latin America
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