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Fiscal decentralization and economic growth: evidence from Brazilian states

Author

Listed:
  • Pedro Jorge Holanda Figueiredo Alves

    (Catholic University of Brasilia, QS 07, Lote 01, Taguatinga Sul - Taguatinga, BrasĂ­lia - DF, 71966-700)

  • Jevuks Matheus Araujo

    (Federal University of Paraiba, Campus I Lot, Cidade Universitaria, PB, 58051-900)

  • Ana Karolina Acris Melo

    (Federal University of Paraiba, Campus I Lot, Cidade Universitaria, PB, 58051-900)

Abstract

This paper investigates the relationship between fiscal decentralization and economic growth in Brazilian states from 1996 to 2015. Using five decentralization measures and the GMM-System model to address the endogeneity problem, we have identified a positive relationship between the indicators of fiscal decentralization and economic growth and observed that the industry and service sectors are the most affected by this decentralization. Our results suggest that local governments with more autonomy make states more efficient, thus increasing economic growth.

Suggested Citation

  • Pedro Jorge Holanda Figueiredo Alves & Jevuks Matheus Araujo & Ana Karolina Acris Melo, 2023. "Fiscal decentralization and economic growth: evidence from Brazilian states," Public Sector Economics, Institute of Public Finance, vol. 47(2), pages 255-280.
    • Handle: RePEc:ipf:psejou:v:47:y:2023:i:2:p:255-280
    DOI: 10.3326/pse.47.2.5
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    More about this item

    Keywords

    decentralization; economic growth; Brazilian states; GMM-System;
    All these keywords.

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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