Revenues and expenditures of Russian regional budgets: Granger causality analysis

Natalia Krasnopeeva ()
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Natalia Krasnopeeva: Center for Strategic Research, Moscow, Russian Federation

Applied Econometrics, 2023, vol. 70, 5-33

Abstract: This paper investigated the causality between expenditures and revenues of consolidated regional budgets of 83 subjects of the Russian Federation in the period from 2002 to 2019. Based on panel data, the Granger-causality test was implemented with the calculation of critical values using the bootstrapping procedure for each individual region. The analysis is based on indicating the direction of the relationship between expenditures and revenues of regional budgets in the context of four hypotheses: “tax-spend”, “spend-tax”, “fiscal synchronization” and “fiscal disunity”. It has been shown that 25% of Russian regions fulfill the “tax-spend” hypothesis, 7% — “spend-tax” hypothesis, 47% — “fiscal synchronization” hypothesis, and 20% —“fiscal disunity” hypothesis. Regions in the “fiscal disunity” group are characterized by a high level of public debt, which for one-third of them may create risks for their fiscal sustainability, and subsequently risks for the federal budget.

Keywords: regional budget revenues; regional budget expenditures; fiscal sustainability; Granger causality; Russian regions (search for similar items in EconPapers)
JEL-codes: H30 H72 H77 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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