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Fiscal management performance and local economic development: evidence from a large emerging economy

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  • Helder Ferreira de Mendonça
  • Matheus Souza Peçanha

Abstract

Purpose - This paper provides empirical evidence regarding the effect of fiscal management performance on local economic development in an emerging economy. Design/methodology/approach - The authors performed a panel data analysis based on data from the 5,568 Brazilian municipalities from 2006 to 2015. To consider if the difference in the characteristics of the municipalities can affect the results, the authors used different samples: a total of municipalities, metropolitan, nonmetropolitan, urban and rural municipalities. Furthermore, to check the difference of the effect on economic development associated with good and bad fiscal management in the municipalities, the authors considered a sample of the 500 best and the 500 worst fiscal management performances. Findings - The findings indicate that an improvement in fiscal management is an important strategy to stimulate local economic development. In particular, the relevance of fiscal management performance to stimulate economic development is more significant in metropolitan and urban municipalities. Originality/value - This analysis is the first to use data that take into account all the Brazilian municipalities covering information of the 21st century. Moreover, different from the previous literature, which considered efficiency from the data envelopment analysis (DEA), the authors used a fiscal management index that allowed one to consider a time-varying fiscal performance of the Brazilian municipalities.

Suggested Citation

  • Helder Ferreira de Mendonça & Matheus Souza Peçanha, 2020. "Fiscal management performance and local economic development: evidence from a large emerging economy," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 48(3), pages 641-659, July.
  • Handle: RePEc:eme:jespps:jes-08-2019-0386
    DOI: 10.1108/JES-08-2019-0386
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    More about this item

    Keywords

    Fiscal management; Local economic development; Municipalities; Panel data analysis; E62; H70; O11;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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