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Modelling intergovernmental fiscal equalisation in Zimbabwe: Towards resolving vertical and horizontal fiscal imbalances

Vincent Chakunda (), Canicio Dzingirai () and Arthur Chikerema ()
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Vincent Chakunda: Midlands State University, Department of Governance and Public Management, Gweru, Zimbabwe
Canicio Dzingirai: Midlands State University, Department of Economic Sciences, Gweru, Zimbabwe
Arthur Chikerema: Midlands State University, Department of Governance and Public Management, Gweru, Zimbabwe

Public Finance Quarterly, 2021, vol. 66, issue 4, 535 - 550

Abstract: The paper deploys a mixed method approach in modelling intergovernmental fiscal equalisation in Zimbabwe. The desirability of the proposed fiscal capacity model is premised on the argument that the anecdotal vertical fiscal imbalance is a structural issue which is corrected through the reassignment of revenue/ expenditure responsibilities among different governmental tiers. The fiscal capacity model, as we have proposed, is underpinned by five variables, namely, total amount to be allocated as declared in the national budget, poverty index (poverty prevalence rate), population of the area, size of the local economy (revenue/GDP ratio) and the estimated intrinsic value of the sub-soil natural resource endowments of the area.

Keywords: intergovernmental fiscal equalisation; intergovernmental transfers; vertical fiscal imbalance; horizontal fiscal imbalance; fiscal capacity model; poverty index; sub-national government (search for similar items in EconPapers)
JEL-codes: H2 H5 H7 I3 (search for similar items in EconPapers)
Date: 2021
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Handle: RePEc:pfq:journl:v:66:y:2021:i:4:p:535-550