ABSTRACT
The goal of the article is to investigate the relationship between political and economic cycles (PEC) and state governments in Brazil, analyzing tax policies and election results from 1995 to 2013. Therefore, the article analyzes state governments manipulation of public spendings in order to indicate government competence to voters and, therefore, to increase the chances of electoral victory of the ruling party. In addition, the article investigates whether expenditures are influenced by ideological-partisan reasons. As theoretical reference the article uses postulates proposed by the Theory of Economic Political Cycles settled fundamentally by Nordhaus (1975), Rogoff (1990), Hibbs (1977) and Alesina (1987). As empirical results the article reveals the presence of CPE in state expenditures in Brazil following, in general, the assumptions outlined by the opportunistic model. Public spending is expanded in electoral years compared to the other years of the mandates, confirming the hypothesis outlined in the article. The presence of the influence of the electoral calendar on the evolution of public spending was observed more forcefully in some specific expenditure functions, such as capital expenditures, investments, works and urbanism. It was observed that there is not an important difference that distinguishes ideological groups in the fiscal policy of the States in Brazil.
fiscal policy; panel data; political-economic cycles; Public spending; public finances