Managing Federal Transfers in Brazil: Do Coalition Members Reap Benefits?

Abstract

Coalitions led by the president play an important role in the Brazilian legislature, but what do members of the president’s coalition gain from joining? We conduct a regression discontinuity analysis of discretionary, politically motivated federal transfers to Brazilian municipalities. Our innovation is to distinguish between the president’s co-partisan mayors and mayors aligned with other coalition members. We find that the president channels pre-election discretionary transfers to co-partisan mayors but does not target coalition members in municipalities. However, the president does not use these transfers to support co-partisan mayors against mayors aligned with coalition members. In other words, the president favors co-partisan mayors over opposition mayors in the two years preceding municipal elections, but not over mayors aligned with other coalition members. Consistent with a model in which coalition members have little agenda-setting power but can veto the president’s proposals, coalition members receive defensive benefits from joining the president’s coalition.