Working paper on staggered terms for the Central Banker and the President published in the Brazilian Central Bank Working Paper Series

The working paper Elections, Heterogeneity of Central Bankers and Inflationary Pressure: the case for staggered terms for the president and the central banker”, co-authored with Fábia A. de Carvalho, was published on September 23, 2019 in the Brazilian Central Bank’s Working Paper Series No. 501.

Non-technical Summary

In most countries that adopt the inflation targeting regime, inflation targets are not set independently by the central bank. Even when there are compliance mechanisms, it is not assured that the central banker will be fully committed with achieving the inflation target. This paper investigates the role of central bank heterogeneity, of inflation targets and of central bank credibility in inflation expectations’ formation when society is imperfectly informed about central banker’s commitment to the target. We look into this problem by extending Vickers (1986)’s and Cukierman e Liviatan (1991)’s signaling models, and applying Cho and Kreps (1987) solution criterion as an equilibrium refinement.

The model solution suggests that greater heterogeneity in central bankers’ commitment to the inflation target requires costlier disinflationary policies. In other words, greater dispersion regarding the preferences of potential central bankers requires that a “strong” central banker be tougher on delivered inflation rates so as to convince society that he is indeed committed to achieving the targets. In the set of equilibria where he manages to gain credibility, realized inflation tends to be below the target, at a higher cost for economic activity.

In an extension of the model presented in the first part of the paper, we investigate how institutional arrangements regarding the tenure in office of central bankers and the head of government can mitigate inflationary pressures stemming from electoral processes. We analyze two distinct institutional arrangements: one where the head of government nominates the central banker as soon as he takes office, and another where the head of government and the central banker serve in staggered terms. In the latter case, when the head of government takes office, the central banker is at the beginning of his third year in office.

The main result suggests that macroeconomic adjustment to the pressures from the political process is much less costly when the head of government and the central banker serve in staggered terms. This result originates from the reduction of information asymmetry about monetary policy when society already knows the type of the central banker by the time the new head of government takes office. This finding gives support to a framework that is common among independent central banks: staggered terms to the central banker and the head of government.

Paper on Enfranchisement and Fiscal Policy accepted for publication in Economics of Governance

The journal Economics of Governance accepted the paper “Does Enfranchisement Affect Fiscal Policy? Theory and Empirical Evidence on Brazil” for publication on September 30, 2019. The paper is co-authored with Rodrigo Schneider and Diloá Arias.

Abstract

This paper studies the effect of political participation on public spending at the local level in Brazil. In particular, we look at the phased-in im- plementation of electronic voting in the late 1990s—which enfranchised poorer voters by decreasing the number of invalid votes—to identify the causal effect of political participation on public spending. We build a theoretical political economy model which allows voters to cast, not purposefully, an invalid vote, and show that when poorer voters’ likelihood of casting a valid vote increases, public social spending increases as well. We test this prediction empirically using a difference-in-differences model where municipalities using electronic voting constitute our treatment group. We find that an increase of 1 percent- age point in the valid vote to turnout ratio for state representatives increases health spending by 1.8%; education by 1.4%; public employment by 1.25%; intergovernmental transfers by 1%; and local taxes by 2.6%.

Keywords: Electronic voting · Political participation · Social public spending · Difference-in-differences

JEL Classification: H21, H4, H5, H7

 

Artigo sobre Responsabilidade Fiscal e o Judiciário publicado em Economic Analysis of Law Review

O artigo: “Responsabilidade fiscal, a atuação do Poder Judiciário e o Comportamento Estratégico dos governantes” acaba de ser publicado pela Economic Analysis of Law Review, 9(3): 30-51, 2018.

O artigo é co-autorado por Débora Costa Ferreira e Fernando Boarato Meneguin.

RESUMO:

Expressivos aumentos nas despesas com pessoal dos mais diversos entes federados, sobretudo em períodos de transição entre governos, representam indícios de que a aplicação prática do arcabouço normativo que estabelece o controle desses gastos não tem moldado os corretos incentivos aos governantes para a realização de gestão fiscal responsável. Nesse contexto, o presente artigo mostra que a atual interpretação dada pelo STF ao principal dispositivo constitucional que regula o tema – art. 169, §1o – tem o potencial de gerar incentivos ao uso estratégico da irresponsabilidade fiscal pelos governantes impopulares em final de mandato, no sentido de tornar vantajosa a geração de déficits com vistas a limitar as possibilidades de sucesso do futuro governo que vencer as eleições e maximizar suas chances de voltar ao poder no futuro. Por meio de modelo teórico, corroborado por evidências quantitativas da sucessão de governos no Distrito Federal, conclui-se que, considerando os requisitos do §1o do art. 169 da CF/88 com meros pressupostos de eficácia – conforme assentou o STF –, o Poder Judiciário atua como instrumento de instabilidade fiscal, estimulando o comportamento estratégico irresponsável do governante; mas, se invalidar os atos normativos que não atenderem a tais requisitos, configura-se como importante instituição de controle da irresponsabilidade fiscal, restringindo efetivamente a atuação oportunista desse governante.

Palavras-chave: Análise Econômica do Direito. Uso estratégico do orçamento. Comportamento estratégico dos governantes. Responsabilidade fiscal. Interpretação constitucional.

JEL: K1; K11

Paper on Electronic Voting and Legislative Voluntary Transfers accepted for publication in the Journal of Applied Economics

The Journal of Applied Economics accepted the paper “Electronic voting and Public Spending: The impact of de facto enfranchisement on federal budget amendments in Brazil” for publication on September 22, 2019.

The paper is co-authored with Rodrigo Schneider and Diloá Arias.

Abstract

This article examines whether an increase in political participation biased toward low-income voters —­and concentrated in legislative elections­— impacts federal representatives’ allocation of resources from the federal budget to Brazilian municipalities. We use a regression discontinuity design that exploits the assignment of electronic voting to municipalities based on population size to identify the causal effect of enfranchisement on allocation of federal public spending. We find that an increase of 1 percentage point in the valid-vote-to-turnout ratio for federal representatives in a municipality increases the allocation of funds from the federal budget by 3.3%, and that experienced politicians are more responsive to the enfranchisement of low-income voters.

Key words: Electronic voting; political participation; politically motivated transfers.

JEL classification codes: C21, D72, D78, E62

 

Evento Extraordinário EPRG: Brasileiros no Japão, SEGUNDA, 23/9, 16hs, FACE/UnB

Economics and Politics Research Group (EPRG, http://www.econpolrg.com), o Programa CAPES-JSPS “Partnership for a change: Toward a Framework of Brazil-Japan Cooperation to Engage in Current and Future Issues” e o Programa Capes PrINT “Desigualdade, globalização, e seus efeitos sobre a sociedade contemporânea” têm o prazer de convidá-lo(a) para o Evento EXTRAORDINÁRIO descrito a seguir.

Brasileiros no Japão: Situação atual e perspectivas

Seminário: Keiichi Yamazaki, Yokohama National University, Japan.

Mesa redonda:
Keiichi Yamazaki, Yokohama National University, Japan.
Hiroyuki Suzuki, Chefe, Departamento Cultural, Embaixada do Japão no Brasil
Alice Joko, Departamento de Línguas Estrangeiras e Tradução– LET/UnB
Maurício Bugarin, Departamento de Economia, UnB

Confraternização: Após a mesa redonda.

Data: Segunda-feira, 23 de setembro de 2019
Horário: 16h00-18h00
Local: Auditório VERDE da FACE, Universidade de Brasília, Campus Darcy Ribeiro, Asa Norte, Brasília

O programa completo do Ciclo 2019-II de Seminários de Pesquisa do EPRG está disponível no site do grupo: http://www.econpolrg.com/seminars

Papers aceitos para apresentação do LACEA-LAMES 2019

Os três artigos a seguir foram aceitos para apresentação no LACEA-LAMES 2019, Puebla, México, 7-9 de novembro de 2019.

1. Redistribution in contemporary Japan: A political economy analysis of Ide, Furuichi and Miyazaki (2016)’s “All for All” fiscal reform proposal.

2. Elections, Heterogeneity of Central Bankers and Inflationary Pressure:  The case for staggered terms for the president and the central banker, coautorado por Fábia Carvalho.

3. Wealth, economic shocks and preference for redistribution: The security-income trade-off, coautorado por Yasushi Hasama

Notas e menções finais de Teoria dos Jogos (Doutorado) e de Análise Micro (MESP) disponíveis

Atenção aluno(a)s de Teoria dos Jogos (Doutorado) e de Análise Micro (MESP):

Estão disponíveis nas páginas correspondentes as notas e menções finais.

Atencionsamente,

Maurício