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Fiscal Decentralization and Soft Budget Constraints

Andrey Timofeev

EERC Working Paper Series from EERC Research Network, Russia and CIS

Abstract: Liberalization policies of transition have led to the mass reduction of enterprise subsidization which prevailed in socialist economies. However, in some sectors of the economy, subsidies associated with price controls remain due to "social" and "political" factors. Moreover in multi-tier governments, subnational levels seem to be more sensitive to these factors because of their proximity to the constituency. Thus decentralization of fiscal resources might interfere with the elimination of re-sidual subsidies. This research establishes a link between fiscal decentralization and the propensity of local governments to subsidize enterprises. The link is tested empirically on a panel of 72 Russian regions over the period 1995 – 1997.

Keywords: Russia; fiscal decentralization; local government; transition; subsidies; price control (search for similar items in EconPapers)
JEL-codes: H25 H77 P31 P35 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2002-04-18
New Economics Papers: this item is included in nep-pbe, nep-pke and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:eer:wpalle:01-12e

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