2026/03/24 by Eduardo Cesar Leão Marques, Ursula Dias Peres, Gabriela Fischer Armani · 1 voice
Economics, Econometrics and Finance · Social Sciences · #Fiscal Policies and Political Economy #Politics and Society in Latin America #Local Government Finance and Decentralization
paper · doi:10.1080/03003930.2026.2649167
openalex publication_date 2026/03/24 · openalex created_date 2026/03/25 · openalex updated_date 2026/06/15
How much does local politics shape public spending? Despite extensive research on federalism and local governance, existing studies primarily focus on fiscal constraints and municipal characteristics, and rarely integrate local politics. This article examines how political attributes influence urban expenditures across 5570 Brazilian municipalities from 2005 to 2022. Combining multivariate and fixed-effects regressions with event-study designs, we find strong evidence that politics influences urban spending, even after controlling for municipal capacity, fiscal constraints, and socioeconomic heterogeneity. Mayors in their second term and easily elected spend more, suggesting that power consolidation matters. Negotiated transfers also increase expenditures. Partisan politics, however, presents heterogeneous effects: while right-wing mayors invest more in urban policies in poorer and smaller municipalities, left-leaning ones substantially increase spending in larger and richer contexts. Mayor changes from the right to the left increase investment, whereas the opposite effect occurs with converse changes, challenging purely technocratic or institutional explanations.