Strategic Partisan Transfers in a Fiscal Federation: Evidence from a New Brazilian Database

Abstract

This article makes use of a unique database that allows, for the first time, calculating in a precise way the amounts of discretionary transfers from the Brazilian Federal government to municipalities in the period from 1997 to 2012. The new database is used to test the "strategic partisan transfers hypothesis", which states that mayors from the same party as the president receive higher federal transfers than those from different parties, if the corresponding municipality is situated in a state where the governor is not aligned with the president. In general, the econometric analysis strongly supports the strategic partisan transfers hypothesis. Furthermore, it supports the hypothesis that there is a biannual political transfers cycle in Brazil due to the country's staggered electoral system with elections every other year.

Strategic spending in federal governments: theory and evidence from the US

“…My contribution relative to these studies is to focus on the role of political alignment in the strategic interaction between governments, and to provide empirical evidence consistent with my model. Regarding empirical studies, Bugarin and Marciniuk (2017) use novel data from Brazil to test what they call "the strategic partisan transfer hypothesis", i.e., mayors from the same party as the President receive more discretionary transfers as long as the Governor is from the opposite party. The logic behind this hypothesis is similar to mine explained above.…”

“…The federal government appears to take advantage of the multilayered system of government in bringing federal dollars to its constituencies. While some previous studies highlight the political incentives present in a federal system (Bugarin & Marciniuk, 2017;Dixit & Londregan, 1998;Volden, 2005), to my knowledge this is the first paper to test this empirically using a novel identification strategy that allows also for the inclusion of state transfers to counties.…”

Electronic voting and public spending: the impact of de facto enfranchisement on federal budget amendments in Brazil

“…These individual representatives' budget amendments fall into the category of voluntary transfers, which has been widely studied in Brazil with a focus on its possible partisan bias. Bugarin and Marciniuk (2017), for example, find evidence that overall federal voluntary transfers to municipalities tend to be higher when the President and the municipality's Mayor both belong to the same party, as long as the governor of the state which the municipality is part does not belong to that same party, himself or herself. This phenomenon is called "strategic partisan transfer hypothesis".…”

The impact of political representation on the provision of public goods and services

“…Similarly, in Brazil, Brollo and Nannicini (2012) and Bugarin and Marciniuk (2017) show that municipalities where the mayor belongs to the same political party as the president receive more discretionary transfers. Firpo et al.…”