Democracy, Ecoomic cycle and public expenditure: Some considerations about the state of Rio Grande do Sul
DOI:
https://doi.org/10.5902/141465093436Keywords:
Déficit per capita, VAR, Budget institutionsAbstract
The current literature on the political economy of the public deficit assumes the hypothesis that in addition to economic factors, are determinants of the public deficit factors of political and institutional orders such as change of institutional regime, legislation Electoral and budgetary institutions. The purpose of this article is to verify the applicability of this hypothesis in the case of the state of Rio Grande do Sul in the period between the years 1964 and 1998. With the use of the intertemporal budget restriction of the government and techniques of Unitary root and cointegration, the long-term equilibrium is tested through the relationship between the variable expenditure and per capita revenue, and the correction mechanism is estimated. It is concluded that the adjustment variable used by the State government is the per capita expenditure, and that the models of interest groups are verified by the present study, as well as the influence of the political system and fiscal institutions.
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