Ensaios sobre efeitos fiscais e econômicos da Lei de Responsabilidade Fiscal e das transferências intergovernamentais nos municípios brasileiros

Abstract

This study aims to estimate the impacts of the Fiscal Responsibility Law (LRF) and the main conditional and unconditional transfers on the following aspects: different types of expenditures; public sector employment and wages, both in direct and indirect administration; and municipal economic growth and development. Fiscal and tax data from 5,570 Brazilian municipalities were analyzed for the period between 2002 and 2019 for the first and third essays, and between 2004 and 2019 for the second essay. Econometric methods were employed to address the endogeneity issue, particularly due to the fact that less developed regions collect fewer revenues and receive a larger amount of transfers. Static panel models with fixed or random effects were used, as well as dynamic panel models (GMM Difference and System).The results of the first essay indicate, among other aspects, that unconditional transfers lead to greater resource capture. Furthermore, the Fiscal Responsibility Law continues to result in increases in personnel expenses with adjustments in investments, but it does not inhibit resource capture. The evidence from the second essay shows: i) expansive effects on public employment resulting from non-compliance with the FRL, as well as on the total remuneration of municipal public employees, but not on average wages; and ii) expansive effects on public sector employment and remuneration associated with unconditional transfers, suggesting that linking transfers to specific expenditures is an instrument to be considered if the goal is to control personnel expenses. The indications from the third essay suggest that non-compliance with the Law is detrimental to production, income, and private sector employment, but beneficial for overall development and, particularly, for the education dimension. Additionally, the instrument of linking transfers to specific expenditures is not always superior to its absence in the analyzed aspects; and own revenue collection is relatively more productive than transfers.