Economics and Politics Research Group

Timing of Opportunism: How Fiscal Rules Reshaped Political Cycles in Brazil

Débora Ferreira

Rodrigo Schneider

Maurício S. Bugarin

This study examines how reelection incentives shape the fiscal behavior of Brazilian mayors under a binding fiscal framework. Using a regression discontinuity design on close elections between 2005 and 2020, we compare first- and second-term incumbents. We find that first-term mayors facing reelection increase both spending and revenues, largely through intergovernmental transfers. However, these effects do not occur in the electoral year. Instead, fiscal expansion is concentrated in the first three years of the mandate, with a pronounced increase in the third year. Our findings indicate that Brazil’s Fiscal Responsibility Law did not eliminate political budget cycles among reelection-seeking first-term mayors but rather reshaped their timing by preventing end-of-term fiscal concentration. Electoral opportunism persists, yet it is strategically anticipated to comply with legal constraints. This evidence highlights how fiscal institutions can modify the temporal structure of political incentives without fully neutralizing them.

Palavras-chave: : electoral accountability, fiscal federalism, political budget cycles.
JEL Codes: D72, H72, H77

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The Economics and Politics Research Group started publishing its working papers on June 12, 2013. Please check here every week for a new working paper.

Promoção da Concorrência em Leilões de Espectro: Uma Análise de Mecanismos com Direito de Preferência para Entrantes

Priscila Honório Evangelista de Souza

Maurício S. Bugarin

Este artigo analisa como diferentes formatos de leilões de espectro afetam três objetivos regulatórios centrais: arrecadação, eficiência alocativa e promoção da entrada. Combinando modelagem teórica e simulações de Monte Carlo, comparam-se dois benchmarks clássicos (SPA e FPA) e quatro mecanismos regulatórios, incluindo propostas inovadoras com direito de preferência para entrantes. Os resultados revelam que mecanismos híbridos com reserva endógena e direito de preferência superam alternativas tradicionais, conciliando metas de arrecadação e inclusão competitiva. Entre eles, o Mecanismo D aproxima-se da fronteira eficiente em termos de receita e alocação, enquanto o Mecanismo C maximiza a entrada com perdas moderadas de arrecadação. Em contraste, formatos baseados apenas em exclusão de incumbentes (set-asides) apresentam desempenho frágil, sobretudo sob assimetria. Ao quantificar esses trade-offs, o estudo oferece subsídios práticos para reguladores e contribui para o debate sobre desenho ótimo de leilões em mercados concentrados, apontando caminhos para políticas públicas que promovam concorrência sem comprometer eficiência e arrecadação.

Palavras-chave: Leilões de espectro; Teoria dos leilões; Direito de preferência; Regulação econômica; Inclusão Digital. Classificação JEL: D44; L96; L51.

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The Economics and Politics Research Group started publishing its working papers on June 12, 2013. Please check here every week for a new working paper.

Mayors within Electoral or Legislative Coalitions? Pre-Electoral Agreements in Brazilian Municipal Legislatures

Roberto Aragão Neto

This work examines whether parties politically connected to the elected mayor have a higher probability of securing the local council presidency at the beginning of the legislative cycle. Results underscore that the support of the Executive branch has a significant causal e!ect on the choice of the local Speaker. Furthermore, the evidence suggests that, in Municipalities, the government based on legislative coalitions observed at the federal level falls behind a mechanism of pre-electoral agreements, especially electoral coalitions. Taking advantage of these agreements, mayors influence the choice of the local council president, which allows the Executive to o!set the absence of institutions that are inherent to the legislative coalition government. To investigate this issue, we assembled a novel dataset on the party a”liation of more than 3,600 Brazilian local councils in 2021, which we paired with a Regression Discontinuity Design (RDD) based on the 2020 mayoral elections in Brazil.

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The Economics and Politics Research Group started publishing its working papers on June 12, 2013. Please check here every week for a new working paper.