Political factors and the efficiency of municipal expenditure in Brazil

This study analyses how political and institutional factors affected the performance of municipalities in improving social welfare in Brazil in the period from1990 to 2000. Themodel adopts a stochastic production frontier, conditioned by variables related to the provision costs of services and those that can affect municipal efficiency. The results indicated that we can not reject:1) economies of scale; 2) the effect of vote margin in the municipality and the type (first or second) of mandate of elected governor, which indicates a form of patronage; and 3) that local politics and the existence of sectorial boards did not affect the level of efficiency for municipal spending, suggesting an asymmetry of information between politics and voters.Este estudo analisa como fatores políticos e institucionais afetama eficiência do gasto municipal no provimento do bem estar para a população ao longo da década dos noventa. O modelo adota a abordagem da fronteira de produção estocástica, condicionada por variáveis relacionadas ao custo da provisão dos serviços e os incentivos que afetam a eficiência municipal. O resultado indica que não podemos rejeitar: 1) economias de escala; 2) o efeito da margem de voto no município e do tipo de mandato (primeiro ou segundo) do governador eleito, indicando uma forma de clientelismo; e que 3) a política local e a existência de comitê setoriais não afetam o nível da eficiência do gasto, o que sugere assimetria de informação entre os políticos e os eleitores

A política fiscal e as taxas de juros nos países emergentes

O estudo analisa o papel da política fiscal sobre as taxas de juros de 18 países emergentes no o período 1996-2008. A questão se justifica, na medida em que, estes países são heterogêneos em muitos aspectos tais como sistema de metas inflação, taxa de poupança, nível de reservas, regime cambial e político; diferenças que podem também afetar a relação entre política fiscal e os juros. O resultado mostra que, mesmo considerando a heterogeneidade diversa dos países emergentes incluídos na amostra, não é possível rejeitar a hipótese de que uma política baseada na austeridade fiscal diminui a taxa de juros doméstica. Um aumento de 1% no superávit primário reduz entre 550 a 100 pontos base os juros, valor três vezes superior ao estimado em Aisen & Hauner (2008) para economias emergentes. Este resultado ilustra a importância da política fiscal na determinação das taxas de juros nos países emergentes, e, portanto, as limitações que o Banco Central se submete no exercício da política monetária.This paper analyzes the role of fiscal policy sustainability on the determinants of domestic interest rate of 18 emerging market countries, in the period 1996-2008. This issue deserves attention since countries in the sample present a great level of heterogeneity relating to inflation target and exchange rate regime, political system, foreign reserves and saving rates; and such differences may also affect interest rate. Despite the heterogeneity between countries, the result shows that is not possible to reject the hypothesis that fiscal policy sustainability decreases domestic interest rate in emerging markets. An increase of 1% at primary budget decreases interest rate between 50 to 100 basis point; a figure tree times higher than the one estimated by Aisen & Hauner (2008) for emerging economies. This fact illustrates the importance of fiscal policy in determining interest rate in emerging economies and therefore the limitation of central bank in the conduction of monetary policy

The Impact of Fiscal Policy on Emerging Markets Sovereign Spreads

Country risk or sovereign spreads affect directly the investment of companies and sovereigns, being an important figure to domestic interest rates and to economic growth. This paper analyzes the impact of fiscal policy on the determinants of the sovereign risk of 23 emerging market countries between 1995-2008. The results associate lower spreads to fiscal austerity, i.e. an accumulation of primary budget surplus that keeps the debt to GDP ratio constant over time. An increase of 1% on primary budget surplus decreases the spreads around 50 basis point. It evidences that fiscal policy sustainability plays a relevant role in determining the sovereign spreads besides contributing as a policy that mitigates external shocks

Capital flow to emerging economies and the domestic financial development

The objective of this is study is to assert the role of domestic financial system as mitigatingof sudden stops episodes and driver of capital flows in a group of 14 emerging economiesin the period of 1999-2013, especially in face of unfavorable external environment suchas high international interest rate or global risk aversion. The countries analyzed – Argentina,Brazil, Chile, Colombia, Indonesia, Malaysia, Mexico, Peru, Philippines, Russia, SouthAfrica, Thailand, Turkey and Ukraine, represented in August 2014 roughly 80% of theEMBIPLUS and 60% of EMBIGLOBAL. We work with distinct types of capital flows: Inflowof Foreign Direct Investment, Inflow of Portfolio and Net Capital, and conduct robustnesscheck considering data since 1990 and increasing the number of emerging countries. Theresult supports evidence that improvement of domestic financial system allows an increaseof capital flow and a decrease of sudden stops probability. Estimates also indicate thatdomestic fundamentals are as important as global factors in explaining capital flows andsudden stops episodes. This fact supports public policies that improve the development andstrength of domestic financial system in emerging economies and stress the governmentrole in attracting external capital.O presente artigo tem como objetivo analisar o papel do sistema financeiro doméstico como mitigador de eventos de paradas súbitas e condicionante de fluxos de capital de um grupo de 14 economias emergentes no período de 1999-2013 em especial em face de cenários externos desfavoráveis como aumento dos juros internacionais e aversão ao risco global. Os países analisados – Argentina, Brasil, Chile, Colômbia, Indonésia, Malásia, México, Peru, Filipinas, Rússia, África do Sul, Tailândia, Turquia e Ucrânia, representavam em agosto de 2014 aproximadamente 80% do índice EMBIPLUS e 60% do índice EMBIGLOBAL. Procurou-se distinguir o efeito sobre diversos tipos de fluxos de capital: Fluxo de entrada de Investimento Estrangeiro Direto, Fluxo de entrada de Investimento em Carteira e Fluxo Líquido, com análise de robustez para período desde 1990 e aumento do número de países emergentes. O resultado suporta evidências que o fortalecimento do sistema financeiro doméstico propicia aumento dos fluxos de entrada de capital diminuindo a probabilidade de ocorrência de parada súbita. Estimativas também destacam o papel dos fundamentos domésticos, tão importantes quanto os fatores globais nos condicionantes de fluxo de capital e na ocorrência paradas súbitas. Este fato motiva políticas públicas que incentivem o fortalecimento e desenvolvimento do sistema financeiro doméstico nos países emergentes, e ressalta o papel dos governos na captação de recursos externos

The Effect of the Simplified Contribution Pension Plan on the Probability of Voluntary Contributions to the Pension System in Brazil

In April 2007 aiming at increasing participation of self-employed workers in the public pension system the Brazilian government launched the Plano Simplificado de Previdência Social (PSPS) – Simplified Pension Plan. The plan allows a reduction of the contributory percentage from 20% to 11% for any self-employed worker who decided to contribute exactly on the value of the minimum wage. Those who opt for the plan can only retire through the age criterion. The main goal of this paper was to verify whether the PSPS had an impact on the probability of voluntary contribution to the social security system of non-formal workers. To reach that goal, we use a random sample extracted from the Cadastro Nacional de Informações Sociais (CNIS) - Social Information National Register , an administrative database that contains information on the history of social security contributions of all workers. The method employed to estimate the impact was the well-known difference-in-differences approach. The results show that the PSPS seems to have increased the probability of voluntary contribution of workers whose base of contribution is the minimum wage.Em abril de 2007, com o objetivo de estimular a inserção previdenciária no Brasil, o governo federal apresentou um plano de previdência alternativo para os contribuintes individuais, o Plano Simplificado de Previdência Social (PSPS). Restringindo os optantes a requerem aposentadoria somente pelo critério de idade, o PSPS permite uma redução da alíquota de contribuição de 20% para 11% para os trabalhadores que contribuem voluntariamente sobre um salário mínimo. O principal objetivo deste estudo foi verificar se o PSPS teve algum impacto sobre a probabilidade de os trabalhadores não formais contribuírem para a Previdência Social. Para tanto, utilizou-se uma amostra aleatória do Cadastro Nacional de Informações Sociais (CNIS), uma base de dados administrativa que contém informações sobre a história previdenciária dos trabalhadores. O método empregado para estimar o impacto do PSPS foi o amplamente conhecido método das diferenças-em-diferenças. Os resultados mostram que o PSPS parece ter aumentado a probabilidade de os trabalhadores que contribuem em torno de um salário mínimo realizarem contribuição voluntária à Previdência

Antiinflammatory Therapy with Canakinumab for Atherosclerotic Disease

Background: Experimental and clinical data suggest that reducing inflammation without affecting lipid levels may reduce the risk of cardiovascular disease. Yet, the inflammatory hypothesis of atherothrombosis has remained unproved. Methods: We conducted a randomized, double-blind trial of canakinumab, a therapeutic monoclonal antibody targeting interleukin-1β, involving 10,061 patients with previous myocardial infarction and a high-sensitivity C-reactive protein level of 2 mg or more per liter. The trial compared three doses of canakinumab (50 mg, 150 mg, and 300 mg, administered subcutaneously every 3 months) with placebo. The primary efficacy end point was nonfatal myocardial infarction, nonfatal stroke, or cardiovascular death. RESULTS: At 48 months, the median reduction from baseline in the high-sensitivity C-reactive protein level was 26 percentage points greater in the group that received the 50-mg dose of canakinumab, 37 percentage points greater in the 150-mg group, and 41 percentage points greater in the 300-mg group than in the placebo group. Canakinumab did not reduce lipid levels from baseline. At a median follow-up of 3.7 years, the incidence rate for the primary end point was 4.50 events per 100 person-years in the placebo group, 4.11 events per 100 person-years in the 50-mg group, 3.86 events per 100 person-years in the 150-mg group, and 3.90 events per 100 person-years in the 300-mg group. The hazard ratios as compared with placebo were as follows: in the 50-mg group, 0.93 (95% confidence interval [CI], 0.80 to 1.07; P = 0.30); in the 150-mg group, 0.85 (95% CI, 0.74 to 0.98; P = 0.021); and in the 300-mg group, 0.86 (95% CI, 0.75 to 0.99; P = 0.031). The 150-mg dose, but not the other doses, met the prespecified multiplicity-adjusted threshold for statistical significance for the primary end point and the secondary end point that additionally included hospitalization for unstable angina that led to urgent revascularization (hazard ratio vs. placebo, 0.83; 95% CI, 0.73 to 0.95; P = 0.005). Canakinumab was associated with a higher incidence of fatal infection than was placebo. There was no significant difference in all-cause mortality (hazard ratio for all canakinumab doses vs. placebo, 0.94; 95% CI, 0.83 to 1.06; P = 0.31). Conclusions: Antiinflammatory therapy targeting the interleukin-1β innate immunity pathway with canakinumab at a dose of 150 mg every 3 months led to a significantly lower rate of recurrent cardiovascular events than placebo, independent of lipid-level lowering. (Funded by Novartis; CANTOS ClinicalTrials.gov number, NCT01327846.

Volatility of Capital Flows to Emerging Economies

The paper proposes a panel model to the determinants of capital flow volatility to a group of 18 emerging market economies (EME) in the period of 2000 to 2011. It studies the robustness of the model regarding different volatility measures; analyses several types of gross capital inflow; focusing the role of government institutional quality and the development of domestic financial system (banks, insurance companies, and capital markets – stocks, bonds and derivatives). The EME analyzed represented roughly 95% of the Emerging Markets Bond Index Global – EMBIG in January 2013, being the biggest destination to international capital flow to EME according to the report of the Bank for International Settlements - BIS (2009). The main conclusion suggests that a reduction of capital flow volatility can be achieved by the adoption of policies that improve government institutional quality and promote development, stability and efficiency of the domestic financial system

O Impacto da Política Fiscal nos Spreads Soberanos: A Austeridade Fiscal e a Qualidade do Ajuste

O objetivo do estudo é analisar o papel da política fiscal na determinação do spread soberano de um grupo de 23 países emergentes no período de 1995 a 2008, focando duas questões: i) a austeridade fiscal, entendida como o acúmulo do superávit primário para uma trajetória sustentável de dívida; e ii) a qualidade do ajuste fiscal, ou seja, a composição do superávit. O estudo expande e trata de algumas limitações apresentadas em Favero e Giavazzi (2004) para o caso brasileiro, e incorpora o debate proposto em Akitoby e Stratmann (2006) sobre a qualidade do ajuste fiscal e a formação dos spreads de risco-país. Os resultados obtidos são robustos para diversas especificações de modelos quanto à austeridade fiscal, à utilização de variáveis instrumentais e aos dois bancos de dados fiscais. Os coeficientes são significativos e apresentam o sinal esperado, ou seja, a redução dos spreads soberanos é função da maior austeridade fiscal, menor endividamento e maior acúmulo de superávit via diminuição de gastos (ajuste do tipo I, basicamente em despesas correntes, em detrimento do ajuste do tipo II, por meio de aumento dos impostos e cortes no investimento público). O estudo corrobora o argumento de que, uma vez controlada pela aversão ao risco internacional, a austeridade fiscal aparece como fator relevante na determinação dos spreads soberanos de países emergentes, além de contribuir como uma potencial política pública de mitigação do efeito-contágio. The objective of this paper is to analyze the role of fiscal policy in the determinants of the sovereign spreads of a group of 23 emerging market countries in the period 1995-2008 focusing on two matters: i) fiscal policy sustainability, known as the accumulation of primary budget surplus, that keeps the debt-to-gdp ratio constant, and ii) the quality of fiscal adjustment, understand as the composition of the primary budget surplus. The paper expands and deals with some limitations in the model proposed by Favero and Giavazzi (2004) to the Brazilian case, and incorporates the debate proposed by Akitoby and Stratmann (2006) regarding the importance of the fiscal policy sustainability as well as the quality of fiscal adjustment in the term premia of sovereign spreads. The results are robust to several model's specifications, by using instrumental variables, and either one of two different database of fiscal variables. The estimates are significant and with the expected signal, i.e., the higher the fiscal sustainability, the less the debt-to-gdp ratio, the less the market risk aversion, the so-called Type I adjustment (expenditure-based mainly on current expenditures) in detriment of the Type II (tax increase and cuts in public spending), the higher the spread reduction. The paper evidence that once accounted for international financial shocks, fiscal policy sustainability plays a relevant role in determining the sovereign spreads of emerging markets besides contribute as an effective public policy that potentially mitigates spillover effects.