Trainee Nestle 2020

As part of an anti-corruption campaign, the Brazilian govern 4287

As part of an anti-corruption campaign, the Brazilian government began

to audit the municipal expenditure of federally-transferred funds. Using

these audit reports, a unique data set of political corruption was

constructed to test whether re-election affects the level of corruption

in a municipality. Consistent with a political economy agency model, it

was found that mayors who are in their second and final term are

significantly more corrupt than first term mayors. In particular, second

term mayors on average divert R$ 188,431 more than first term mayors,

which is approximately 4 percent of the total amount transferred to

municipalities. There is also much more pronounced effect among

municipalities where the costs of rent-extraction are lower, and density

of pivotal voters is higher. The results also illustrate an important

trade-off: second term mayor, while more corrupt, provides a higher

level of public goods. As Brazil and other countries continue their

decentralization process, these findings promote the need for a better

understanding of how local institutions can help reduce the incentives

for corruption.

Internet: <http://are.berkeley.edu/~ferraz/corruption_01_26_05.pdf> (with adaptations).

According to the text above, it can be concluded that"to audit" means to examine thoroughly.

Questão no QuestionsOf: As part of an anti-corruption campaign, the Brazilian govern 4287

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