Brazilian Subnational Governments' Debt: An Analysis Based on the Fiscal Federalism View

This study aimed to identify whether the Brazilian subnational governments could be considered independent of the national government regarding their debts. One of the motivations was to explore the theme of the Brazilian government debt, taking into account the convergence of the Brazilian accounting standards in the public sector to the IFAC standards. Thus, regressions were performed with the use of structural models. The net debts disclosed by the Central Bank of Brazil were analyzed individually to the federal government, and to the state governments and municipal governments, on a consolidated basis, from January 2000 to December 2010. The conclusion is that the federal government debt exerts influences on the state government debts, directly, and on the municipal government debts, indirectly.