Modelling Intergovernmental Fiscal Equalisation in Zimbabwe — Towards Resolving Vertical and Horizontal Fiscal Imbalances

Vincent Chakunda, Canicio Dzingirai and Arthur Chikerema

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 whose antidote is reassignment of revenue or 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; subnational government (search for similar items in EconPapers)
JEL-codes: H20 H50 H70 I30 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:pfq:journl:v:66:y:2021:i:4:p:535-550

DOI: 10.35551/PFQ_2021_4_5

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