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Size matters: fragmentation and vertical fiscal imbalances in Moldova

Serhan Cevik ()

Empirica, 2017, vol. 44, issue 2, 367-381

Abstract: Abstract Using a novel municipality-level panel dataset, this paper investigates the empirical characteristics of vertical fiscal imbalances (VFIs) in Moldova over the period 2005–2013. The results show that the extent of variation in VFIs across 898 municipalities can be explained by the level of per capita income, fiscal capacity, and demographic characteristics, as well as the central government’s fiscal behavior that reflects fiscal constraints and policy preferences at the national level. Political affiliation does not appear to be a significant factor, but the results show lower VFIs when the mayor of a municipality belongs to the same party ruling the central government. Altogether, these findings underscore the need for well-coordinated reforms to create economies of scale, enhance revenue collection, and improve the composition of spending at the subnational level.

Keywords: Vertical fiscal imbalance; Fiscal decentralization; Subnational governments (search for similar items in EconPapers)
JEL-codes: H11 H62 H70 H71 H72 (search for similar items in EconPapers)
Date: 2017
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Working Paper: Fragmentation and Vertical Fiscal Imbalances Lessons from Moldova (2014) Downloads
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