Taking Portfolios Difference Seriously: A Composite Measure Based on Policy, Office, and Budget in Brazil

Abstract

Portfolio allocation is the keystone of coalition government analysis. It constitutes the fundamental payoff in coalition formation, providing access to government decision-making. However, are all portfolios the same or have the same weight in government decision-making? This research note presents a measure of portfolio differences based on three dimensions: policy, office, and budget. Factor analysis is used to generate a composite indicator of portfolio importance in Brazil from 1999 to 2014. Results show that portfolios vary significantly in importance in each of the three dimensions, meaning that a ministry of little importance in one dimension can be very important in another. With policy, office, and budget combined, the most important ministry is the Ministry of Finance and the least important is the Ministry of Fishery. This indicator is the first step to summarize the differences between ministries that can be used to inform empirical analysis about coalition formation and governance in Brazil.