Fiscal Decentralization, Budget Discipline, and Local Finance Reform in Russia’s Regions

Michael Alexeev, Nikolay Avxentyev, Arseny Mamedov and Sergey Sinelnikov-Murylev
Authors registered in the RePEc Author Service: Nikolay Avksentyev

Public Finance Review, 2019, vol. 47, issue 4, 679-717

Abstract: Using a panel of Russian regions, we estimate the link between intraregional fiscal decentralization and regional budget deficits. Although Russia’s regions are not as autonomous (either politically or fiscally) as regions in some other federal states, we obtain robust and statistically and economically significant results. Specifically, expenditure decentralization has a positive effect on consolidated regional budget balances, while transfer dependence of municipalities is associated with higher deficits. The impact of revenue decentralization depends on whether a regional government can use its tax revenue assignments with the same high degree of discretion that generally characterizes explicit fiscal transfers. We show that a 2009 local finance reform that limited the discretion of regional governments to assign regional tax revenue to municipalities has changed the effect of tax decentralization on budget discipline.

Keywords: fiscal federalism; budget discipline; Russian economy (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:47:y:2019:i:4:p:679-717

DOI: 10.1177/1091142118804245

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