Public Choice: um estudo para o caso brasileiro

Abstract

In modern day democracies, the leader of the executive power is also the greatest resource manager in the country. Even though legislative bonds control a significant share of resources available, the manager has decision power over a significant amount of resources and holds the decision process of how these resources will be spent and above all how they will be distributed inside the country. According to the classical approach to public economics, when it comes to intergovernamental grants, the government will act in a rational way, seeking to maximize social welfare. Nevertheless, this may not always be true, since researchers of Public Choice theory argue that the manager will pursue their own interests; therefore, they could use the intergovernmental grants to maximize the number of votes they or their party could receive in next elections. This paper aims to analyze if the political factor is relevant to grants determination, examining the grants from the union to all Brazilian states from 1999 to 2017. Factors such as governors and congressmen parties and number of votes for the president in previous elections will be utilized to test the political component. The proposed methodology consists of a random effects panel, and the results show evidence pointing that the political component matters in the determination of intergovernmental grants, especially if both the state governor and the president belong to the same political party.