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Fiscal decentralization and economic growth: evidence from Brazilian states
Pedro Jorge Holanda Figueiredo Alves* 
Jevuks Matheus Araujo*
Jevuks Matheus Araujo
Affiliation: Federal University of Paraiba, Campus I Lot, Cidade Universitaria, PB, 58051-900
 0000-0002-5618-4502
Ana Karolina Acris Melo*
Ana Karolina Acris Melo
Affiliation: Federal University of Paraiba, Campus I Lot, Cidade Universitaria, PB, 58051-900
0000-0002-9688-1249
Eduarda Mashoski*
Eduarda Mashoski
Affiliation: Federal University of Paraiba, Campus I Lot, Cidade Universitaria, PB, 58051-900
0000-0001-7061-4727
Article | Year: 2023 | Pages: 255 - 280 | Volume: 47 | Issue: 2 Received: June 30, 2022 | Accepted: February 6, 2023 | Published online: June 12, 2023
|
FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
LICENCING
PDF
|
Municipalities
|
85-94
|
95-99
|
00-04
|
05-09
|
10-15
|
85-94
|
95-99
|
00-04
|
05-09
|
10-15
|
|
Brazil
|
11.37
|
22.66
|
18.08
|
18.07
|
19.48
|
60.26
|
60.92
|
65.67
|
66.86
|
64.13
|
|
Midwest
|
9.53
|
24.84
|
12.11
|
12.98
|
15.71
|
66.83
|
75.12
|
74.28
|
72.31
|
71.90
|
|
Northeast
|
6.90
|
12.12
|
9.54
|
9.68
|
18.05
|
60.56
|
79.25
|
79.27
|
80.74
|
84.70
|
|
North
|
5.80
|
13.27
|
9.35
|
10.33
|
31.69
|
56.73
|
76.73
|
77.45
|
79.05
|
86.47
|
|
Southeast
|
22.04
|
26.43
|
23.81
|
23.84
|
19.75
|
50.59
|
52.64
|
58.44
|
59.42
|
49.62
|
|
South
|
12.57
|
19.86
|
15.19
|
15.41
|
17.40
|
66.57
|
67.31
|
65.41
|
65.88
|
71.21
|
|
States
|
85-94
|
95-99
|
00-04
|
05-09
|
10-15
|
85-94
|
95-99
|
00-04
|
05-09
|
10-15
|
|
Brazil
|
79.14
|
65.59
|
63.35
|
62.34
|
61.91
|
18.66
|
24.22
|
22.31
|
24.53
|
22.43
|
|
Midwest
|
59.79
|
50.11
|
58.70
|
62.58
|
58.44
|
31.08
|
40.97
|
27.74
|
22.75
|
20.98
|
|
Northeast
|
56.38
|
50.25
|
47.28
|
45.79
|
48.49
|
34.64
|
43.69
|
39.48
|
43.19
|
40.26
|
|
North
|
45.18
|
42.68
|
41.85
|
41.15
|
41.61
|
62.08
|
49.87
|
48.53
|
48.87
|
44.35
|
|
Southeast
|
82.70
|
77.23
|
72.10
|
71.02
|
70.09
|
9.07
|
13.13
|
11.95
|
13.99
|
11.94
|
|
South
|
84.69
|
62.59
|
67.33
|
67.21
|
68.29
|
10.50
|
18.34
|
19.61
|
22.35
|
19.90
|
Note: Data from the National Treasury Secretariat.
Note: Data from the National Treasury Secretariat.
Note: Data from the National Treasury Secretariat.
|
Explanatory variable
|
Variable
|
Reason for inclusion
|
Source
|
|
Main variables
|
|
|
|
|
Revenue indicator
|
RI
|
Ratio between the state revenue i and the
consolidated revenue
|
STN
|
|
Production Indicator
|
PI
|
Ratio between the expenditure of state i
and the consolidated expenditure
|
STN
|
|
Production and Revenue Indicator
|
PRI
|
Weighted average between Revenue and
Production indicator
|
STN
|
|
Autonomy Indicator 1
|
A1
|
The ratio between the own revenue of the
states and their total revenue, excluding transfers
|
STN
|
|
Autonomy Indicator 2
|
A2
|
The ratio between the own revenue of the
states and the total of their revenue.
|
STN
|
|
Control variables
|
|
|
|
|
Degree of commercial opening
|
OPNESS
|
Ratio between the trade balance result
and GDP
|
Comex Stat
|
|
Gini Index
|
Gini
|
Gini Index for income concentration
|
IPEADATA/IBGE
|
|
Population
|
POP
|
Population value
|
IBGE
|
|
Employed population
|
POP OCUP
|
Number of people who are employed
|
IBGE
|
|
Dummy Election
|
ELECTION
|
Dumymy variable indicating state election
years
|
Superior electoral court (TSE)
|
|
Homicide Rate
|
HOM
|
Homicide rate per one hundred thousand
inhabitants
|
IBGE
|
|
School Effectiveness
|
PSE
|
Efficiency indicator created from school
attendance, years of schooling, and illiteracy rate variables
|
IPEADATA/IBGE
|
|
Variables
|
Mean
|
Std. dev.
|
Min
|
Max
|
|
Dependent variables
|
|
Δ GDP
|
0.124593
|
0.064578
|
-0.07
|
0.33
|
|
Δ Agriculture
|
0.123953
|
0.270231
|
-0.62
|
2.29
|
|
Δ Industry
|
0.131147
|
0.243828
|
-0.43
|
2.40
|
|
Δ Services
|
0.151147
|
0.205321
|
-0.50
|
4.03
|
|
Mainly variables
|
|
A1
|
0.809024
|
0.092698
|
0.14
|
1.00
|
|
A2
|
0.498713
|
0.173038
|
0.09
|
0.87
|
|
PI
|
0.007712
|
0.012192
|
0.0006
|
0.13
|
|
RI
|
0.007681
|
0.012195
|
0.000533
|
0.14
|
|
PRI
|
0.007697
|
0.012186
|
0.000546
|
0.13
|
|
Control variables
|
|
Education
|
1.00
|
0.094177
|
0.77
|
1.21
|
|
Openness
|
0.145475
|
0.127781
|
0.01
|
0.59
|
|
POP
|
6,762,641
|
8,029,421
|
254,499
|
44,000,000
|
|
Gini
|
0.55241
|
0.049231
|
0.42
|
0.69
|
|
Homicide Rate
|
28.13537
|
13.15587
|
4.50
|
71.40
|
|
Occupied population
|
2,952,986
|
3,778,686
|
70,996
|
22,000,000
|
Note: The colored lines represent the standard error. See table A1 in appendix for more details.
Note: The colored lines represent the standard error. See tables A2, A3 and A4 for more details.
|
Estimator: GMM
|
Equations
|
|
Variables
|
(1.1)
|
(1.2)
|
(1.3)
|
(1.4)
|
(1.5)
|
|
∆ GDP L1.
|
0.01
|
-0.00
|
0.04
|
0.02
|
0.03
|
|
(0.38)
|
(-0.16)
|
(1.24)
|
(0.74)
|
(1.09)
|
|
A1
|
0.05
|
–
|
–
|
–
|
–
|
|
(1.03)
|
–
|
–
|
–
|
–
|
|
A2
|
–
|
0.07***
|
–
|
–
|
–
|
|
–
|
(3.29)
|
–
|
–
|
–
|
|
RI
|
–
|
–
|
0.12***
|
–
|
–
|
|
–
|
–
|
(5.65)
|
–
|
–
|
|
PI
|
–
|
–
|
–
|
0.04**
|
–
|
|
–
|
–
|
–
|
(2.38)
|
–
|
|
PRI
|
–
|
–
|
–
|
–
|
0.09***
|
|
–
|
–
|
–
|
–
|
(3.44)
|
|
Education
|
-0.14
|
-0.05
|
0.29**
|
0.08
|
0.15
|
|
(-1.13)
|
(-0.61)
|
(2.56)
|
(0.96)
|
(1.03)
|
|
Openness
|
0.03**
|
0.02
|
0.05***
|
0.03**
|
0.04**
|
|
(2.37)
|
(1.53)
|
(2.73)
|
(2.04)
|
(2.23)
|
|
Gini
|
0.19***
|
0.14***
|
0.34***
|
0.24***
|
0.27***
|
|
(4.95)
|
(4.41)
|
(8.79)
|
(7.43)
|
(7.81)
|
|
Pop
|
-0.03
|
-0.05*
|
-0.14***
|
-0.05
|
-0.10**
|
|
(-1.50)
|
(-1.65)
|
(-3.90)
|
(-1.60)
|
(-2.39)
|
|
Homicide Rate
|
0.00*
|
0.00
|
-0.00
|
0.00
|
0.00
|
|
(1.72)
|
(0.85)
|
(-0.17)
|
(0.88)
|
(0.33)
|
|
Occupied Population
|
0.00
|
0.01*
|
0.00
|
0.00
|
0.00
|
|
(0.98)
|
(1.67)
|
(0.78)
|
(0.47)
|
(0.72)
|
|
Dummy Election
|
-0.00
|
-0.00*
|
-0.01***
|
-0.01***
|
-0.00**
|
|
(-1.37)
|
(-1.90)
|
(-4.40)
|
(-3.36)
|
(-2.20)
|
|
Constant
|
0.72**
|
0.93**
|
3.14***
|
1.29**
|
2.35***
|
|
(2.08)
|
(2.19)
|
(4.39)
|
(2.35)
|
(2.83)
|
|
Observations
|
513
|
513
|
513.00
|
513
|
513
|
|
Wald Test
|
178.48
|
260.44
|
397.17
|
354.57
|
270.53
|
|
Number of Instruments
|
286
|
439
|
286
|
286
|
286
|
|
Sargan Test Chi2
|
25.28
|
24.97
|
24.62
|
25.81
|
25.37
|
|
Prob > Chi2
|
(1.00)
|
(1.00)
|
(1.00)
|
(1.00)
|
(1.00)
|
|
Arellano-Bond Test
|
|
|
|
|
|
|
Order 1
|
-4.23***
|
-4.14***
|
-4.40***
|
-4.18***
|
-4.34***
|
|
Prob > z
|
(0.00)
|
(0.00)
|
(0.00)
|
(0.00)
|
(0.00)
|
|
Order 2
|
-1.80*
|
-1.88*
|
-1.35
|
-1.79*
|
-1.57
|
|
Prob > z
|
(0.08)
|
(0.07)
|
(0.12)
|
(0.05)
|
(0.11)
|
|
Estimator: GMM
|
Equations
|
|
Variables
|
(1.1)
|
(1.2)
|
(1.3)
|
(1.4)
|
(1.5)
|
|
∆ GDP L1.
|
-0.04
|
-0.06
|
-0.05
|
-0.04
|
-0.05
|
|
(-0.79)
|
(-1.23)
|
(-1.64)
|
(-1.40)
|
(-1.53)
|
|
A1
|
-0.03
|
–
|
–
|
–
|
–
|
|
(-0.19)
|
–
|
–
|
–
|
–
|
|
A2
|
–
|
0.07
|
–
|
–
|
–
|
|
–
|
(0.44)
|
–
|
–
|
–
|
|
RI
|
–
|
–
|
0.17***
|
–
|
–
|
|
–
|
–
|
(3.47)
|
–
|
–
|
|
PI
|
–
|
–
|
–
|
0.16**
|
–
|
|
–
|
–
|
–
|
(2.18)
|
–
|
|
PRI
|
–
|
–
|
–
|
–
|
0.17***
|
|
–
|
–
|
–
|
–
|
(2.82)
|
|
Education
|
0.30
|
0.44
|
1.22***
|
1.12***
|
1.22***
|
|
(0.48)
|
(0.75)
|
(2.99)
|
(2.70)
|
(2.84)
|
|
Openness
|
0.04
|
0.04
|
0.06
|
0.05
|
0.05
|
|
(0.64)
|
(0.59)
|
(1.45)
|
(1.06)
|
(1.21)
|
|
Gini
|
0.17
|
0.24*
|
0.40***
|
0.29***
|
0.37***
|
|
(1.46)
|
(1.67)
|
(3.27)
|
(2.69)
|
(3.17)
|
|
Pop
|
-0.09
|
-0.07
|
-0.16
|
-0.13
|
-0.15
|
|
(-0.48)
|
(-0.35)
|
(-1.24)
|
(-0.97)
|
(-1.13)
|
|
Homicide Rate
|
0.01***
|
0.00
|
0.00
|
0.00
|
0.00
|
|
(2.90)
|
(1.34)
|
(1.21)
|
(1.03)
|
(1.19)
|
|
Occupied Population
|
-0.00
|
-0.01
|
-0.02
|
-0.03
|
-0.03
|
|
(-0.00)
|
(-0.16)
|
(-0.23)
|
(-0.38)
|
(-0.31)
|
|
Dummy Election
|
-0.02
|
-0.03***
|
-0.02**
|
-0.02
|
-0.02*
|
|
(-1.60)
|
(-3.42)
|
(-1.97)
|
(-1.20)
|
(-1.70)
|
|
Constant
|
1.61
|
1.56
|
4.18***
|
3.69**
|
4.02**
|
|
(0.65)
|
(0.56)
|
(2.68)
|
(2.13)
|
(2.38)
|
|
Observations
|
513
|
513
|
513
|
513
|
513
|
|
Wald Test
|
32.27
|
58.71
|
57.19
|
63.72
|
55.09
|
|
Number of Instruments
|
286
|
286
|
286
|
286
|
286
|
|
Sargan Test Chi2
|
22.77
|
18.23
|
20.79
|
20.85
|
24.50
|
|
Prob > Chi2
|
(1.00)
|
(1.00)
|
(1.00)
|
(1.00)
|
(1.00)
|
|
Arellano-Bond Test
|
|
|
|
|
|
|
Order 1
|
-3.68***
|
-3.51
|
-3.67***
|
-3.77***
|
-3.73***
|
|
Prob > z
|
(0.00)
|
(0.00)
|
(0.00)
|
(0.00)
|
(0.00)
|
|
Order 2
|
-1.41
|
-1.97**
|
-1.65*
|
-1.36
|
-1.52
|
|
Prob > z
|
(0.15)
|
(0.04)
|
(0.09)
|
(0.17)
|
(0.12)
|
|
Estimator: GMM
|
Equations
|
|
Variables
|
(1.1)
|
(1.2)
|
(1.3)
|
(1.4)
|
(1.5)
|
|
∆ GDP L1
|
-0.18
|
-0.08
|
0.56
|
-0.06
|
0.51
|
|
(-0.68)
|
(-0.20)
|
(0.96)
|
(-0.15)
|
(1.03)
|
|
A1
|
0.27**
|
–
|
–
|
–
|
–
|
|
(2.54)
|
–
|
–
|
–
|
–
|
|
A2 -
|
–
|
0.03
|
–
|
–
|
–
|
|
–
|
(0.52)
|
–
|
–
|
–
|
|
RI -
|
–
|
–
|
0.06
|
–
|
–
|
|
–
|
–
|
(1.05)
|
–
|
–
|
|
PI -
|
–
|
–
|
–
|
-0.05
|
–
|
|
–
|
–
|
–
|
(-0.55)
|
–
|
|
PRI -
|
–
|
–
|
–
|
–
|
0.07
|
|
–
|
–
|
–
|
–
|
(0.69)
|
|
Education
|
-0.18
|
-0.08
|
0.56
|
-0.06
|
0.51
|
|
(-0.68)
|
(-0.20)
|
(0.96)
|
(-0.15)
|
(1.03)
|
|
Openness
|
0.04**
|
0.00
|
0.08**
|
0.04*
|
0.09**
|
|
(1.98)
|
(0.20)
|
(2.40)
|
(1.91)
|
(2.36)
|
|
Gini
|
0.72***
|
0.66***
|
0.79***
|
0.81***
|
0.86***
|
|
(10.21)
|
(6.80)
|
(5.04)
|
(7.50)
|
(4.87)
|
|
Pop
|
-0.01
|
-0.00
|
-0.15*
|
-0.01
|
-0.17
|
|
(-0.16)
|
(-0.01)
|
(-1.68)
|
(-0.12)
|
(-1.63)
|
|
Homicide Rate
|
0.00
|
0.00
|
0.00
|
0.00*
|
0.00
|
|
(1.03)
|
(0.47)
|
(0.45)
|
(1.89)
|
(0.81)
|
|
Occupied Population
|
0.03***
|
0.04***
|
0.03***
|
0.02***
|
0.05
|
|
(6.34)
|
(6.56)
|
(4.32)
|
(3.25)
|
(0.89)
|
|
Dummy Election
|
0.00
|
-0.00
|
-0.00
|
-0.01*
|
-0.00
|
|
(0.15)
|
(-0.06)
|
(-0.09)
|
(-1.95)
|
(-0.78)
|
|
Constant
|
0.38
|
0.03
|
2.90*
|
0.20
|
3.14
|
|
(0.54)
|
(0.04)
|
(1.67)
|
(0.12)
|
(1.45)
|
|
Observations
|
513
|
513
|
513
|
513
|
513
|
|
Wald Test
|
651.69
|
795.83
|
482.41
|
404.99
|
306.72
|
|
Number of Instruments
|
286
|
286
|
286
|
286
|
286
|
|
Sargan Test Chi2
|
21.58
|
24.61
|
21.11
|
22.20
|
20.44
|
|
Prob > Chi2
|
(1.00)
|
(1.00)
|
(1.00)
|
(1.00)
|
(1.00)
|
|
Arellano-Bond Test
|
|
|
|
|
|
|
Order 1
|
-3.04***
|
-2.86***
|
-3.00***
|
-2.94***
|
-2.96***
|
|
Prob > z
|
(0.00)
|
(0.00)
|
(0.00)
|
(0.00)
|
(0.00)
|
|
Order 2
|
-1.87*
|
-1.84*
|
-2.04**
|
-1.93*
|
-2.32**
|
|
Prob > z
|
(0.06)
|
(0.05)
|
(0.04)
|
(0.05)
|
(0.02)
|
|
Estimator: GMM
|
Equations
|
|
Variables
|
(1.1)
|
(1.2)
|
(1.3)
|
(1.4)
|
(1.5)
|
|
∆ GDP L1.
|
-0.07***
|
-0.07***
|
-0.07***
|
-0.08***
|
-0.07***
|
|
(-31.90)
|
(-27.23)
|
(-37.12)
|
(-17.04)
|
(-44.84)
|
|
A1
|
7.65***
|
–
|
–
|
–
|
–
|
|
(9.25)
|
–
|
–
|
–
|
–
|
|
A2 -
|
–
|
7.40***
|
–
|
–
|
–
|
|
–
|
(13.73)
|
–
|
–
|
–
|
|
RI
|
–
|
–
|
2.27***
|
–
|
–
|
|
–
|
–
|
(15.23)
|
–
|
–
|
|
PI
|
–
|
–
|
–
|
-2.27***
|
–
|
|
–
|
–
|
–
|
(-8.15)
|
–
|
|
PRI
|
–
|
–
|
–
|
–
|
-0.15
|
|
–
|
–
|
–
|
–
|
(-1.19)
|
|
Education
|
-7.14**
|
-0.82
|
2.30
|
-9.64***
|
-3.41**
|
|
(-2.05)
|
(-0.50)
|
(1.02)
|
(-4.98)
|
(-2.10)
|
|
Openness
|
-1.00***
|
-0.77***
|
-0.71***
|
-1.34***
|
-0.99***
|
|
(-4.59)
|
(-3.80)
|
(-4.44)
|
(-9.90)
|
(-8.02)
|
|
Gini
|
-6.92***
|
-8.43***
|
-1.53***
|
-5.01***
|
-3.43***
|
|
(-10.96)
|
(-9.55)
|
(-4.36)
|
(-11.40)
|
(-7.04)
|
|
Pop
|
0.60
|
-3.28***
|
-1.55***
|
2.56***
|
0.78**
|
|
(0.46)
|
(-6.45)
|
(-3.41)
|
(3.92)
|
(2.25)
|
|
Homicide Rate
|
0.00
|
0.00
|
0.00
|
0.03*
|
0.01
|
|
(0.13)
|
(0.32)
|
(0.43)
|
(1.96)
|
(1.40)
|
|
Occupied Population
|
0.65***
|
0.95***
|
0.43***
|
0.51***
|
0.40***
|
|
(3.39)
|
(6.22)
|
(4.21)
|
(5.22)
|
(4.53)
|
|
Dummy Election
|
-0.55***
|
-0.47***
|
-0.69***
|
-0.66***
|
-0.63***
|
|
(-10.28)
|
(-7.00)
|
(-13.49)
|
(-10.98)
|
(-18.43)
|
|
Constant
|
-22.27
|
36.00***
|
28.08***
|
-64.55***
|
-22.18***
|
|
(-1.26)
|
(4.29)
|
(3.85)
|
(-6.02)
|
(-3.74)
|
|
Observations
|
513
|
513
|
513
|
513
|
513
|
|
Wald Test
|
1,7021.67
|
14,106.26
|
19,232.38
|
26,595.50
|
87,624.82
|
|
Number of Instruments
|
286
|
286
|
286
|
286
|
286
|
|
Sargan Test Chi2
|
26.30
|
26.53
|
26.6256
|
26.82
|
26.77
|
|
Prob > Chi2
|
(1.00)
|
(1.00)
|
(1.00)
|
(1.00)
|
(1.00)
|
|
Arellano-Bond Test
|
|
|
|
|
|
|
Order 1
|
-1.17
|
-1.18
|
-1.14
|
-1.16
|
-1.15
|
|
Prob > z
|
(0.24)
|
(0.23)
|
(0.25)
|
(0.24)
|
(0.24)
|
|
Order 2
|
-1.45
|
-1.45
|
-1.54
|
-1.56
|
-1.55
|
|
Prob > z
|
(0.14)
|
(0.14)
|
(0.12)
|
(0.11)
|
(0.12)
|
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|
|
June, 2023
II/2023
|
