The law of fiscal management responsibility: Combating government failures in the Brazilian way

Vol. 24 No. 3 (2004)

Jul-Sep / 2004
Published July 1, 2004
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Luque, Carlos Antonio, and Vera Martins da Silva. 2004. “The Law of Fiscal Management Responsibility: Combating Government Failures in the Brazilian Way”. Brazilian Journal of Political Economy 24 (3):413-32.

The law of fiscal management responsibility: Combating government failures in the Brazilian way

Carlos Antonio Luque
Professor titular do Departamento de Economia da Universidade de São Paulo – USP, São Paulo/SP, Brasil - Secretário-Adjunto da SEP/SP, São Paulo-SP, Brasil.
Vera Martins da Silva
Professora licenciada da Universidade da Fundação Escola de Comércio Alvares Penteado - UNIFECAP, São Paulo/SP, Brasil - Assessora da Sociedade Brasileira de Economia Política da SEP/SP, São Paulo-SP, Brasil
Brazilian Journal of Political Economy, Vol. 24 No. 3 (2004), Jul-Sep / 2004, Pages 413-432


The purpose of this article is analyzing the principal aspects of the new regulation, the so-called “ Lei de Responsabilidade na Gestão Fiscal” using the framework of the budget imbalance as a government failure. We pointed out that the principle of the new regulation is that if the government planning is highly detailed and the deficit is under control, we will observe neither inflation nor debt pressures. There are two great issues of control: limits to expenditures with personnel’s salaries and the amount of debt. The new regulation restrains the public action during the last year of mandate and deals with the importance of spreading information on fiscal issues and the public participation on the budgetary practices. Despite the good aspects of the regulation – especially on the last year of a given government’s expenditures, there are still some problems: the lack of discussion on the adequate size and functions of the government and the anti-cyclical component of the government action which is despised by the law.

JEL Classification: H60; H61; H62; H63.

Keywords: Regulation government failure public planning size of government budget balance