FISCAL MECHANISMS AND COMMUNITY RESILIENCE IN THE EUROPEAN UNION: A COMPARATIVE ANALYSIS OF LOCAL GOVERNMENT RESPONSES TO ECONOMIC SHOCKS

Dobrota Gabriela, Dan Nicoleta, Popa Daniela and Butanescu-Volanin Remus-Constantin
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Dobrota Gabriela: CONSTANTIN BRANCUSI UNIVERSITY OF TARGU JIU
Dan Nicoleta: LUCIAN BLAGA UNIVERSITY OF SIBIU
Popa Daniela: LUCIAN BLAGA UNIVERSITY OF SIBIU
Butanescu-Volanin Remus-Constantin: LUCIAN BLAGA UNIVERSITY OF SIBIU

Annals - Economy Series, 2025, vol. 6, 286-296

Abstract: The capacity of communities to withstand and recover from economic, social, and environmental crises increasingly depends on the fiscal mechanisms implemented by national and local governments. This article examines the relationship between fiscal policy instruments and the socio-economic resilience of local communities, with particular attention to revenue structures, intergovernmental transfers, and public investment at the subnational level. Using comparative data for Romania, Poland, Germany, and Finland over the period 2015–2023, the study analyzes how different fiscal architectures influence local governments’ ability to absorb shocks such as the COVID-19 pandemic, inflationary pressures, and energy price volatility. The empirical analysis relies on data from Eurostat Government Finance Statistics, the European Commission, the OECD, and the World Bank. Descriptive and comparative methods are employed to construct indicators of fiscal autonomy, transfer dependency, and local investment effort, which are combined into a composite fiscal resilience index. The results reveal significant crosscountry differences in local fiscal capacity and crisis responses. Higher shares of own-source revenues, predictable intergovernmental transfers, and sustained public investment are associated with stronger resilience outcomes. The findings highlight the importance of transparent, decentralized, and institutionally robust fiscal systems, with specific policy implications for Romania and other highly centralized governance models.

Keywords: fiscal mechanisms; community resilience; local governance; public policy; economic shocks; decentralization (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:cbu:jrnlec:y:2025:v:6:p:286-296

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