This study analysed the effects of public debt interest and charges through on Financial Fragility Hypothesis (FFH), in relation to Brazilian states’ public debt. Structural equation modelling was used as the empirical procedure. The effects of the structural model’s constructs explained 90.2% of the Public Sector Financial Position. The proposed model showed significance and relevance of the formative indicators. The results show that financial fragility is caused by excessive current spending but is aggravated by interest and amortisation costs that exceed the Current Revenue/Current Expenditure balance. This evidence confirms the assumptions of the FFH when applied to the public sector.

This paper conducts an Integrative Literature Review on the Financial Fragility Hypothesis presented by Minsky and on Financial Fragility Applied to the Public Sector. Twenty papers were chosen that addressed the proposed theme in both quantitative and qualitative procedures. The topics discussed ways of measuring financial fragility, effects on fiscal policy and need for regulation, relations between investment, cash flow expectations, the influence of interest rates and indebtedness on firms, and financial instability. The integration reinforced the conceptual aspects and propositions presented by Minsky, broadening in an integrated way the understanding of his theoretical assumptions regarding financial fragility, addressing the causes, observations, and economic and institutional consequences, in addition to signaling for insufficiencies of more empirical studies and the public sector.

This paper conducts an Integrative Literature Review on the Financial Fragility Hypothesis presented by Minsky and on Financial Fragility Applied to the Public Sector. Twenty papers were chosen that addressed the proposed theme in both quantitative and qualitative procedures. The topics discussed ways of measuring financial fragility, effects on fiscal policy and need for regulation, relations between investment, cash flow expectations, the influence of interest rates and indebtedness on firms, and financial instability. The integration reinforced the conceptual aspects and propositions presented by Minsky, broadening in an integrated way the understanding of his theoretical assumptions regarding financial fragility, addressing the causes, observations, and economic and institutional consequences, in addition to signaling for insufficiencies of more empirical studies and the public sector.