TAX EQUALIZATION AND ECONOMIC GROWTH: A THRESHOLD ANALYSIS ON BRAZILIAN STATE PARTICIPATION FUND

• Autor(a) principal: Neduziak, Luiz Carlos Ribeiro
• Data de Publicação: 2019
• Outros Autores: Correia, Fernando Motta
• Tipo de documento: Artigo
• Idioma: por
• Título da fonte: Análise Econômica (Online)
• Texto Completo: https://seer.ufrgs.br/index.php/AnaliseEconomica/article/view/73190
• topic: Transferência Intergovernamental; Crescimento Econômico; Estados brasileiros.; H77; O40; H72; Intergovernmental relations; Economic growth; Brazil; H77; O40; H72

The paper aims to analyze how Brazilian states have responded in terms ofeconomic growth per capita to transfers coming from federal government program,through the Participation Fund of the States and the Federal District (FPE). The literatureon tax equalization has emphasized the positive and negative side of the adoption of fiscalequalization programs on the economic performance of subnational entities, such asmunicipalities and states. To measure the impact of the scheme of transfers on the GDP percapita growth of Brazilian states, one adopts the model of Devarajan, Swarrop and Zou(1996) together with a threshold effect, as described in Hansen (1999). The cornerstoneof the paper was to capture possible different effects of public spending on the rate ofeconomic growth per capita depending on the level of budgetary dependence on differentstate entities. The econometric results suggest a double output: on the one hand, Brazilian states with higher degree of dependence on transfers from the Union are those that presenta negative correlation between the ratio Investment/Personnel Expenditure (IGP) and thereal GDP growth rate and, on the other hand, Brazilian states with lower dependence onUnion transfers show a positive association between GDP growth and Investment/SpendingPersonnel (IGP).