Written with Gustavo Fernandes (FGV), Daniel Faleiros (CONASEMS), Socorro P. Martínez (UC Davis), Diana Moreira (UC Davis) and Blenda Pereira (CONASEMS)

This project investigates a puzzling phenomenon: in developing countries, substantial portions of government budgets go unspent despite clear needs for additional resources to improve public services. In Brazil, the term ‘Apagão das Canetas’ (Pen Blackout) has gained popularity, highlighting officials’ reluctance to approve expenses due to fears of penalties for failing to comply with complex, ambiguous rules that are often enforced inconsistently by oversight bodies. We term this ‘compliance uncertainty’ in our study. We are collaborating with CONASEMS (the Brazilian Council of Municipal Health Secretaries) to use administrative data on municipal health spending and a survey experiment to explore whether compliance uncertainty around spending rules stifles spending that could benefit the public and distorts policy choices.