Institutional Learning and the Limits of Fiscal Rules: A Public Choice Perspective

Abstract

This article investigates the process of constructing fiscal discipline in Brazil from the Camata Law (Lei Complementar No. 82/1995) to the approval of the Fiscal Responsibility Law (FRL) in 2000, and examines its subsequent deterioration from 2014 onwards. It analyses the evolution of personnel expenditure limits, sanction mechanisms and enforcement instruments over the period 1995 to 2000. Using a qualitative approach based on documentary and institutional analysis, the study draws on the relevant legislation and historical fiscal data series. The paper identifies the initial lack of effective sanctions and enforcement tools in the Camata Law, as well as the advances introduced by Constitutional Amendment No. 19/1998 and the New Camata Law (Lei Complementar No. 96/1999). This work shows how, through learning‑by‑doing, these successive reforms culminated in a broader institutional framework with the FRL and it concludes that fiscal discipline depends on societal pressure.