Punctuated Equilibrium Theory in Brazilian Public Policy: The Case of Ceará

Abstract

This research aims to analyze the budget decision process in Ceara municipalities in order to understand in which way budget distributions change (or not) during the research period under consideration. This research also aims to understand which revenues (the independent variables) of each municipality better explain the political choices for local government investments (the dependent variable). Making use of data from 2006 to 2010 and using a cross-sectional research design, the study concludes a stability in local government investments periods of stress where such investments have both positive and negative significant fluctuations – confirming our working hypothesis. These results confirm punctuated Equilibrium Theory assumptions and also find that local government public investment is dependent on money transfers from the central government and also from capital revenues. Thus, it is important to question to what degree public indebtedness should be allowed, due to a scarcity of public funds.