Fiscal Capacity and Execution at the Local Level: New Evidence from Brazil

Abstract This paper introduces a new disaggregated and harmonized dataset on public procurement and budget execution by Brazilian subnational entities, which covers half of Brazilian municipalities and spans the years 2003–2021. This dataset provides key information that was previously unavailable from aggregate data, such as the identities of suppliers, details on purchases of goods and services, and granular information on the life cycle of each expenditure action. It then uses these data to provide new stylized facts about local public finance. First, it shows that about one-quarter of government purchases are locally procured and discusses implications for efficiency. Second, it demonstrates that close to 15 percent of payments exceed the 30-day threshold and that payment timeliness is systematically correlated with the income level of the municipality. Finally, it shows that municipalities where mayors have reelection incentives systematically employ more non-competitive tenders and buy more from local suppliers.