Fiscal Decentralization and Economic Growth of Brazilian States

Abstract

The present study aims to analyze the relationship between the level of fiscal decentralization and the economic growth of macro-regions in Brazil. Based on the estimation of an econometric model in static panel data with fixed effects covering the period from 1995 to 2016, the results obtained indicate that fiscal decentralization positively impacts the economic growth of Brazilian macro-regions, but through different transmission channels. Specifically, in the South and Southeast macroregions, the collection autonomy promotes economic growth, while in the other macroregions, the relevant aspect is the decentralization of revenues.