Rendas do Petróleo e Tributos Locais: Uma Análise de Propensity Score (Oil Windfalls and Local Tax in Brazil: A Propensity Score Analysis)
Posted: 17 Jul 2012
Date Written: July 16, 2012
With the pre-salt discoveries and the increasing distribution of royalties in Brazil, the discussions on the impact of oil windfalls - royalties and special participation - on benefited Municipalities have been intensified. This article aims to contribute to the understanding of the issue, using a methodology that allows building a counterfactual for municipalities treated with oil resources. The aim is to investigate whether these transfers reduce the own tax effort of cities covered by such revenues. For this, we applied the Double Robust method to a panel of municipalities observed from 2000 to 2009. The method consists of two stages. Firstly, it estimates the probability of receiving oil revenues conditioned to observable variables; in a second stage, a fixed-effect model was estimated with data belonging to a common support constructed through the estimated propensity scores in the first stage. The results show that there is a negative effect of royalties on fiscal effort of the cities benefited. However, this result does not occur when one computes the average effect on all cities.
Note: Downloadable document is in Portuguese.
Keywords: Propensity score, Double Robust, oil royalties, fiscal effort
JEL Classification: H77, C21
Suggested Citation: Suggested Citation