Budget contraint and Fiscal Responsability Law: a study for the State of Minas Gerais, Brazil (1995-06)

Abstract

Several institutional changes in the last years have imposed to the public administrators the adoption of several policies intended to adjust the State for the new economic order. The expenditure control has turned to be central in the political economy. Regarding the Brazilian states, a dynamic of successive deficits was reverted through the renegotiation of the states debts, as well as the advent of the Fiscal Responsibility Law. This paper aims at analyzing the public finance of the State of Minas Gerais from 1995 to 2006, highlighting the impacts of the above-cited law considering its implications over the federalism in Brazil.