Essays on the political economy of corruption and environmental regulation in Brazil

The asymmetry of information between voters and policymakers is a central feature of the political process. Voters do not observe politicians' actions and their interests are not always aligned with politicians objectives. Hence, elections play an important role by making politicians accountable for poor performance. However, political accountability might also induce distortions if policymakers adopt excessively popular policies near election periods. This thesis examines the relationship between political incentives, corruption, and the implementation of regulatory policies using a framework from political agency models and unique datasets on municipal corruption and environmental regulation from Brazil.; The first chapter tests whether re-election incentives affect the level of rent extraction by incumbent politicians. The existence of term limits in Brazil's municipal elections provides an operational proxy for re-election incentives, and the results reveal that there is significantly more corruption in municipalities where mayors are in their second and final term, when compared to similar municipalities where mayors are in their first-term. In particular, in municipalities with second-term mayors, the level of diversion of resources increases by an average of US{dollar}85,650, and the incidence of irregularities is 31 percent higher. This difference between first and second-term mayors is further exacerbated in municipalities where the costs of rent-extraction are lower (municipalities without media and judicial presence) and where the density of pivotal voters is higher. Moreover, first-term mayors, while less corrupt, suffer from a greater tendency toward less effective administration which suggests that there may exist a trade-off between the level of corruption and administrative quality in public good provisioning.; The second chapter examines the relationship between electoral politics and the implementation of environmental regulation. Using a unique dataset of applications and approvals of environmental licenses in municipalities of Sao Paulo. Brazil, it studies whether incumbent politicians, facing with re-election incentives, influence the implementation of regulatory policies in a way that will favor them at the polls. It shows that bureaucrats approve more environmental licenses in election years and target these approvals based on political motivations. In years of gubernatorial elections, more licenses are approved in municipalities where there is a large presence of "loyal" voters whereas in years of mayoral elections, there are more licenses approved in locations where the mayor belongs to the same party as the governor. Finally, the results show a significant increase in license approvals for municipalities where mayors belong to the same party as the governor and can get re-elected. I interpret this as evidence that center politicians use targeted regulations to favor local politicians that can retribute by gathering local votes for the next election. These results highlight the potential distortions imposed by the political capture of policy implementation for electoral purposes.; The third chapter looks at the extent to which the provisioning of information enables voters to hold corrupt politicians accountable. Specifically, it exploits a natural experiment provided by a recent anti-corruption program, which randomly audits municipal expenditures of federally-transferred funds, to estimate the impact of the disclosure of local government corruption practices on the re-election success of incumbent mayors in municipal elections. The results show that the disclosure of information on the audits had a significant impact on the reelection rates of mayors found to be corrupt. In particular, for a one standard deviation increase in reported corruption, the audit policy reduced the incumbent's likelihood of reelection by 25 percent. This effect is also more pronounced in municipalities where radio stations...