| Grant number: | 11/15221-7 |
| Support Opportunities: | Scholarships in Brazil - Master |
| Start date: | March 01, 2012 |
| End date: | December 31, 2012 |
| Field of knowledge: | Applied Social Sciences - Economics |
| Principal Investigator: | Fabiana Fontes Rocha |
| Grantee: | Fernando Joao Alexandre Parmagnani |
| Host Institution: | Faculdade de Economia, Administração e Contabilidade (FEA). Universidade de São Paulo (USP). São Paulo , SP, Brazil |
Abstract The flypaper effect, one of the distortions caused by the grants system, such that grants resources have a more stimulating effect on spending of local governments than an equivalent increase in private income of the residents in these localities, is one of the most discussed topics in fiscal federalism literature. However, literature traditionally restricted to evaluate the impact of general-purpose nonmatching transfers. In this work we intend to extend the discussion to the case of specific-purpose nonmatching grants, analyzing their impact on health expenditures of the Brazilian states. This analysis raises a further question: in addition to the expansive effect on spending is expected a substitution effect, to the extent that local governments may not fully comply with the incentive of the federal government and to allocate part of the amount of grants to other purposes. We aim to also check whether these effects are different in periods of soft budget constraint and in periods of hard budget constraint, checking for changes in these effects with the advent of the Fiscal Responsibility Law. | |
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