The public choice sedition: variations on the theme of scientific warfare

Given a significant element of truth in "Public Choice", a modest element must be found when a similar approach is made to the behavior of economic scientists. Harry Johnson found this in "The Keynesian Revolution and the Monetarist Counter-Revolution". Following him, I find more in the Public Choice "Revolution" itself. The basic visions, assumptions and methods of the latter are appraised within its time-space stream. "Variations on a theme by Buchanan" or "The B- and F-Twist" could have been suggestive subtitles for this paper -- an embrycnic Economics of Knowledge, a complement to the Sociology of Knowledge.

Public versus private provision of infrastructure in a neoclassical growth model

This article studies the welfare and long run allocation impacts of privatization. There are two types of capital in this model economy, one private and the other initially public (“infrastructure”). A positive externality due to infrastructure capital is assumed, so that the government could improve upon decentralized allocations internalizing the externality, but public investmentis …nanced through distortionary taxation. It is shown that privatization is welfare-improving for a large set of economies and that after privatization under-investment is optimal. When operation inefficiency in the public sectoror subsidy to infrastructure accumulation are introduced, gains from privatization are higherand positive for most reasonable combinations of parameters.

Private or public? a taxonomy of optimal ownership and management regimes

We develop a theory of public versus private ownership based on value diversion by managers. Government is assumed to face stronger institutional constraints than has been assumed in previous literature. The model which emerges from these assumptions is fexible and has wide application. We provide amapping between the qualitative characteristics of an asset, its main use - including public goods characteristics, and spillovers toother assets values - and the optimal ownership and management regime. The model is applied to single and multiple related assets. We address questions such as; when is it optimal to have one of a pair ofr elated assets public and the other private; when is joint management desirable; and when should a public asset be managed by the owner of a related private asset? We show that while private ownership can be judged optimal in some cases solely on the basis of qualitative information, the optimality of any other ownership and management regimes relies on quantitative analysis. Our results reveal the situations in which policy makers will have difficulty in determining the opimal regime.

Three essays on local demand for public services

Local provision of public services has the positive effect of increasing the efficiency because each locality has its idiosyncrasies that determine a particular demand for public services. This dissertation addresses different aspects of the local demand for public goods and services and their relationship with political incentives. The text is divided in three essays. The first essay aims to test the existence of yardstick competition in education spending using panel data from Brazilian municipalities. The essay estimates two-regime spatial Durbin models with time and spatial fixed effects using maximum likelihood, where the regimes represent different electoral and educational accountability institutional settings. First, it is investigated whether the lame duck incumbents tend to engage in less strategic interaction as a result of the impossibility of reelection, which lowers the incentives for them to signal their type (good or bad) to the voters by mimicking their neighbors’ expenditures. Additionally, it is evaluated whether the lack of electorate support faced by the minority governments causes the incumbents to mimic the neighbors’ spending to a greater extent to increase their odds of reelection. Next, the essay estimates the effects of the institutional change introduced by the disclosure on April 2007 of the Basic Education Development Index (known as IDEB) and its goals on the strategic interaction at the municipality level. This institutional change potentially increased the incentives for incumbents to follow the national best practices in an attempt to signal their type to voters, thus reducing the importance of local information spillover. The same model is also tested using school inputs that are believed to improve students’ performance in place of education spending. The results show evidence for yardstick competition in education spending. Spatial auto-correlation is lower among the lame ducks and higher among the incumbents with minority support (a smaller vote margin). In addition, the institutional change introduced by the IDEB reduced the spatial interaction in education spending and input-setting, thus diminishing the importance of local information spillover. The second essay investigates the role played by the geographic distance between the poor and non-poor in the local demand for income redistribution. In particular, the study provides an empirical test of the geographically limited altruism model proposed in Pauly (1973), incorporating the possibility of participation costs associated with the provision of transfers (Van de Wale, 1998). First, the discussion is motivated by allowing for an “iceberg cost” of participation in the programs for the poor individuals in Pauly’s original model. Next, using data from the 2000 Brazilian Census and a panel of municipalities based on the National Household Sample Survey (PNAD) from 2001 to 2007, all the distance-related explanatory variables indicate that an increased proximity between poor and non-poor is associated with better targeting of the programs (demand for redistribution). For instance, a 1-hour increase in the time spent commuting by the poor reduces the targeting by 3.158 percentage points. This result is similar to that of Ashworth, Heyndels and Smolders (2002) but is definitely not due to the program leakages. To empirically disentangle participation costs and spatially restricted altruism effects, an additional test is conducted using unique panel data based on the 2004 and 2006 PNAD, which assess the number of benefits and the average benefit value received by beneficiaries. The estimates suggest that both cost and altruism play important roles in targeting determination in Brazil, and thus, in the determination of the demand for redistribution. Lastly, the results indicate that ‘size matters’; i.e., the budget for redistribution has a positive impact on targeting. The third essay aims to empirically test the validity of the median voter model for the Brazilian case. Information on municipalities are obtained from the Population Census and the Brazilian Supreme Electoral Court for the year 2000. First, the median voter demand for local public services is estimated. The bundles of services offered by reelection candidates are identified as the expenditures realized during incumbents’ first term in office. The assumption of perfect information of candidates concerning the median demand is relaxed and a weaker hypothesis, of rational expectation, is imposed. Thus, incumbents make mistakes about the median demand that are referred to as misperception errors. Thus, at a given point in time, incumbents can provide a bundle (given by the amount of expenditures per capita) that differs from median voter’s demand for public services by a multiplicative error term, which is included in the residuals of the demand equation. Next, it is estimated the impact of the module of this misperception error on the electoral performance of incumbents using a selection models. The result suggests that the median voter model is valid for the case of Brazilian municipalities.

Demand aggregation and credit risk effects in pooled procurement: evidence from the Brazilian public purchases of pharmaceuticals and medical supplies

Pooled procurement has an important role in reducing acquisition prices of goods. A pool of buyers, which aggregates demand for its members, increases bargaining power and allows suppliers to achieve economies of scale and scope in the production. Such aggregation demand e ect lowers prices paid for buyers. However, when a buyer with a good reputation for paying suppliers in a timely manner is joined in the pool by a buyer with bad reputation may have its price paid increased due to the credit risk e ect on prices. This will happen because prices paid in a pooled procurement should refect the (higher) average buyers' credit risk. Using a data set on Brazilian public purchases of pharmaceuticals and medical supplies, we nd evidence supporting both e ects. We show that the prices paid by public bodies in Brazil are lower when they buy through pooled procurement than individually. On the other hand, federal agencies (i.e. good buyers) pay higher prices for products when they are joined by state agencies (i.e. bad buyers) in a pool. Such evidence suggests that pooled procurement should be carefully designed to avoid that prices paid increase for its members.

Comments on public debt indexation and denomination, the case of Brazil

In this work I analyze the model proposed by Goldfajn (2000) to study the choice of the denomination of the public debt. Some potential shortcmomings of the mo dei in explaining the data are discussed. Measures of the overestimation of the welfare gains of reducing distortions from taxation, under the model's simplified time frame, are also provided. Assuming a time-preference parameter of 0.9, for instance, welfare gains associated with a hedge to the debt that reduces to half a once-for-all 20o/o-of-GDP shock to governemnt spending run around 1.43% of GDP under the no-tax-smoothing structure of the model. Under a Ramsey allocation, though, welfare gains amount to just around 0.05% of GDP.

Public debt management, monetary policy and financial institutions

Despite the large size of the Brazilian debt market, as well the large diversity of its bonds, the picture that emerges is of a market that has not yet completed its transition from the role it performed during the megainflation years, namely that of providing a liquid asset that provided positive real returns. This unfinished transition is currently placing the market under severe stress, as fears of a possible default from the next administration grow larger. This paper analyzes several aspects pertaining to the management of the domestic public debt. The causes for the extremely large and fast growth ofthe domestic public debt during the seven-year period that President Cardoso are discussed in Section 2. Section 3 computes Value at Risk and Cash Flow at Risk measures for the domestic public debt. The rollover risk is introduced in a mean-variance framework in Section 4. Section 5 discusses a few issues pertaining to the overlap between debt management and monetary policy. Finally, Section 6 wraps up with policy discussion and policy recommendations.

Tecnologia assistiva no Brasil : uma análise das ações da FINEP, período 2005 a 2008

A partir da importância que o tema pessoas portadoras de deficiência vem ganhando na agenda das políticas públicas brasileira nos últimos anos, a presente pesquisa teve como objetivo analisar as ações realizadas pela Finep no período de 2005 a 2008 cuja temática é a Tecnologia Assistiva (TA), para verificar se as ações geraram a introdução efetiva de produtos, serviços e processos inovadores no mercado consumidor de TA. A metodologia utilizada foi a Grounded Theory e a fonte primária de dados e de informações foi obtida na própria Finep. A pesquisa também apresenta exemplos de como as políticas públicas para TA vem sendo implementadas na União Europeia e Austrália. O estudo mapeou as principais dificuldades enfrentadas pelas instituições e empresas dedicadas aos projetos inovadores de TA para a introdução dos produtos assistivos nas linhas de produção e propiciou uma reflexão sobre as suas causas e sugestão sobre a participação mais efetiva e direta dos envolvidos e a continuidade das ações para alcance dos resultados almejados nas ações de TA apoiadas pela Finep. Há, no entanto, um hiato entre a pesquisa, o lote piloto ou prova de conceito e a efetiva produção dos bens e serviços assistivos e vários são os motivos identificados na pesquisa que concorrem para esse distanciamento como, por exemplo, o perfil das empresas e sua propensão ao risco, uma vez que o ciclo de execução do projeto de TA demanda várias fases e, portanto, tempo até se obter o protótipo e poder iniciar a comercialização.

Spatial spillovers and political coordination in public health provision

We estimate the impact of the main unconditional federal grant (Fundo de Participaçãodos Municípios - FPM) to Brazilian municipalities as well as its spillover from the neighboring cities on local health outcomes. We consider data from 2002 to 2007 (Brollo et al, 2013) and explore the FPM distribution rule according to population brackets to apply a fuzzy Regression Discontinuity Design (RDD) using cities near the thresholds. In elasticity terms, we nd a reduction on infant mortality rate (-0.18) and on morbidity rate (- 0.41), except in the largest cities of our sample. We also nd an increase on the access to the main program of visiting the vulnerable families, the Family Health Program (Programa Sa ude da Família - PSF). The e ects are stronger for the smallest cities of our sample and we nd increase: (i) On the percentage of residents enrolled in the program (0.36), (ii) On the per capita number of PSF visits (1.59), and (iii) On the per capita number of PSF visits with a doctor (1.8) and nurse (2). After we control for the FPM spillover using neighboring cities near diferent thresholds, our results show that the reduction in morbidity and mortality is largely due to the spillover e ect, but there are negative spillover on preventive actions, as PSF doctors visits and vaccination. Finally, the negative spillover e ect on health resources may be due free riding or political coordination problems, as in the case of the number of hospital beds, but also due to to competition for health professionals, as in the case of number of doctors (-0.35 and -0.87, respectively), specially general practitioners and surgeons (-1.84 and -2.45).