Estimation of Fiscal Convergence of the Countries of the Eurasian Economic Union using the Multidimensional Ellipsoid Method

Elena F. Kireeva and Alan K. Karaev

Journal of Applied Economic Research, 2025, vol. 24, issue 1, 34-58

Abstract: The main source of formation of national budgets and financial resources that ensure the macroeconomic stability of economic unions are their own revenue sources: tax, non-tax payments, other potential reserves. The purpose of the study is to assess the fiscal convergence of the countries of the Eurasian Economic Union (EAEU) based on the indicators of internal revenue sources of national budgets. The hypothesis of the study suggests that the degree of fiscal convergence among the countries of the Eurasian Economic Union is directly affected by the states' national revenues as the main sources of the financial stability of national economies and the united economy. The article analyzes the indicators that determine the formation of internal revenue sources of the state budget (budget revenues, budget deficit, tax revenues). The multidimensional geometric approach is used - the method of the multidimensional minimum volume ellipsoid, which assesses dynamic changes in the volume of space between the countries of the EAEU. This method allows us not only to visualize the ongoing convergence processes in the territory of the analyzed countries, but also to assess the overall impact of the studied indicators on fiscal convergence. The results of the study demonstrate unstable convergence/divergence trends within the integration entity over the past 11 years, which indicates insufficient use of joint fiscal levers to stabilize the overall macroeconomic situation. The proposed indicators of own revenue sources allow us to clearly establish the degree of convergence of fiscal systems in multidimensional space. It has been revealed that the countries studied did not achieve significant fiscal convergence during the analyzed period despite their participation in economic unions, specifically the EAEU. During shock situations, countries pursue fiscal policies that cater for their domestic interests, without coordinating its consequences with one another. The theoretical significance of the obtained results lies in the expansion of the assessment pool of fiscal convergence indicators; the practical significance lies in the possible harmonization of national fiscal policies to ensure macroeconomic stabilization in the economic union during periods of crisis.

Keywords: fiscal convergence; own revenue sources; budget and tax policy; integration entities; fiscal sustainability (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:aiy:jnjaer:v:24:y:2025:i:1:p:34-58

DOI: 10.15826/vestnik.2025.24.1.002

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