Pedro Henrique Da Silva Santos Salerno
Master's – Does the finance secretary affect budget outcomes? Evidence for Brazilian states
Advisor: Profa. Dra. Fabiana Fontes Rocha
Comission: Profs. Drs. Pedro Henrique Thibes Forquesato, Sérgio Naruhiko Sakurai and Dra. Ana Carolina Giuberti
Link YouTube: https://youtu.be/0rHm19OPsF0
The prevalence of fiscal crisis in Brazilian sub-national governments and their macroeconomic effects are the main motivations for studying fiscal balance’s explanatory factors. Public choice literature draws attention to the importance of political agents’ incentives on making budgeting decisions. We propose an analysis of both the budgeting process and the formulation of projections that serve as a guide to fiscal policy. According to the public choice literature, we assume that the political agents responsible for the budget have incentives to manipulate revenue previsions. Using a panel database concerning 26 Brazilian states and the Federal District between 1995 and 2018, we aim to empirically test the explanatory power of the budgeting errors on fiscal deficits: the results show that 10% of revenue underestimation manifests itself in the fiscal deficits. Also, with an original database concerning the finance secretaries, we explore which political, professional, andpersonal characteristics of the finance secretaries could influence budgetary prevision bias and overall fiscal balances: we find out that the finance secretary’s experience worsens the fiscal balance, while experient planning secretaries correlate to reduced deficits. Those results are relevant to explore what is the actual influence of secretaries responsible for the budget on the Brazilian states’ fiscal path.
JEL Classification: C33, H30, H71, H72
*Abstract provided by the author