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MAYORAL FISCAL
PERFORMANCE AND
REELECTION SUCCESS
C. Alexandre A . Rocha
Prof. James E. Kee, Advisor

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Objective
• To determine if there is a relationship
between the fiscal performance of Brazilian
municipalities and the reelection chances of
their mayors.
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Theoretical Literature
• Elections as reasonably efficient
instruments of choosing the best
representatives (Wittman, 1989).
• Asymmetric information can generate
moral hazard and adverse selection (Le
Borne e Lockwood, 2002).
• Higher the percentage of non-informed
voters, lower the efficiency of the electoral
process (Baron, 1994).
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Empirical Literature
• Reelection for legislatives offices (Hall and
van Houweling, 1995; Kiewiet and Zeng,
1993) and for the Presidency of the U.S.
(Peltzman, 1992; Cuzán and Bundrick , 2000).
• In Brazil, Leoni, Perereira and Rennó (2001)
analyses the elections for legislatives offices,
and Mendes (2004) explores the relationship
between the candidature and reelection
probabilities, and how well the incumbent
mayors publicized their efforts and how well
they performed as public managers.
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Characteristics of Phenomena
• Big numbers of potential observations (5,561
municipalities).
• Elections happen at the same time.
• Constitutional amendment allowing reelections
approved in 1997: all mayors elected in 1996
knew, since the beginning of their term (1997-
2000), they could be reelected once.
• There is a two year lag between municipal
elections and the state and federal elections.
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Incumbent Mayor’s Options
1. Abandoning politics.
2. Running for town councilor.
3. Being up for reelection.
4. Remaining two years without mandate and
then running for an office in the federal or
state government.
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Decision of Running for Reelection
1. Chance of being reelected.
2. Cost of the electoral campaign.
3. How well the mayoral office is valued by
the incumbent mayor.
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Model
REEL* = α ' z i + η i
i if CANDi = 1
REELi = 1 if REEL* > 0 and
i 0 otherwise
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Types of Variables Used
• Fiscal performance between 1997 and 1998 (fiscal
performances per se, tax revenues, current revenues,
current transfers received, and current expenses).
• Personal characteristics (being a candidate and electoral
performance in the election of 1996).
• Local characteristics (Human Development Index, GINI
coefficient, urban population, local population compared
to the state one, population density and growth,
percentage of mayors reelected in municipalities
belonging to the same micro region, being a capital,
belonging to a metropolitan area, belonging to the North,
North-East, Center-West, South or Southeast regions,
being new and being divided).
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Model Handicaps
• Campaign expenditures.
• Age.
• Level of education.
• Cross-section.
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Matrix of Candidature and Reelection (*)
Non-Reelected Reelected Total
31.4% _ 31.4%
Non-Candidate
Candidate 28.2% 40.4% 68.6%
Total 59.6% 40.4% 100.0%
(*) Mayors older than 70 years were excluded whenever there
were data about age .
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Effective Sample
Only 2,333 fulfilled the required prerequisites:
• Their mayors were less than 70 years old.
• Their fiscal accounts were available to
general public.
• Their mayors actually tried to be reelected
in the election of 2000.
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Estimation
Non Significative Significative
Fiscal Performance. Current Expenses,
Tax Revenue. Transfers and Revenues.
GINI Coefficient. N, NE, CW and S.
Municipality Divided. Micro region.
Metropolitan Area. Population Density.
Population Growth. Percentage of State
Population. (–)
Urban Area. (–)
Capital.
New Municipality.
Performance in the 1996
Election.
HDI. 13

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Conclusions
• The fiscal federalism model adopted by
Brazil promotes further increases of local
expenses.
• Electoral process in the North and Northeast
regions than in the Southeast.
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Topics for Further Investigation
• Comparison between big and small cities
(however, only 220 municipalities have
more than 100.000 inhabitants).
• Effect of the Fiscal Responsibility Law
(Complementary Law n. 101, of 2000).
• Identification of other feasible explanatory
variables.
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