The size of the flypaper effect and political strength: an analysis for Brazilian municipalities

Abstract

This paper aims at analyzing the presence of flypaper effect and its variability by using a threshold model proposed by Hansen (2000). We used data of Brazilian municipalities from 2010 and the variable political strength takes the role of threshold by inferring about the variability of the flypaper effect in public finance of the Brazilian municipalities. Our results indicates the presence of the flypaper effect in public finance of the Brazilian municipalities and prove empirically the relationship between political and budget decisions, occurring more intense flypaper effect in municipalities whose mayor’s political allies are proportionally outnumber opponents in the City Councils. Moreover, in municipalities with politically strong mayor the heterogeneity of the allies in the City Council raises the expenditure budget, evoking evidence of favoring clientelistic and costly practices for the municipalities.