Vertical Fiscal Imbalance and Regional Economic Growth

Boris I. Alekhin ()
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Boris I. Alekhin: Russian State University for the Humanities, Moscow 125993, Russian Federation

Finansovyj žhurnal — Financial Journal, 2020, issue 6, 39-53

Abstract: This study examines the impact of fiscal decentralization on regional economic growth using panel data for 82 subjects of the Russian Federation for the period 2005-2018. General theoretical framework was drawn from the second-generation theory of fiscal federalism, and panel data econometrics suggested the appropriate empirical model and estimation method. The pooled mean group method was used to estimate an autoregressive distributed lags model based on Solow-Swan theory of economic growth. The results indicate that vertical fiscal gap has a negative and significant long-term impact on regional economic growth while vertical fiscal imbalance has a positive and significant long-term effect. The study is consistent with the modern theory of fiscal federalism, W.E. Oates’ matching hypothesis and previous empirical work using Russian data. The study also found evidence of conditional convergence of regional economies.

Keywords: fiscal decentralization; regional economic growth; conditional convergence (search for similar items in EconPapers)
JEL-codes: C23 E13 H71 H72 H77 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:fru:finjrn:200603:p:39-53

DOI: 10.31107/2075-1990-2020-6-39-53

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