Fiscal Federalism and Government Size in Transition Economies: The Case of Moldova

International Monetary Fund

No 1999/176, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the relationship between fiscal decentralization—the assignment of revenue sources and expenditure functions across government levels—and government size in Moldova. The empirical results—based on data for a cross-section of Moldovan subnational governments in 1998—suggest that fiscal decentralization is associated with larger subnational governments and that the country’s revenue-sharing system imposes a constraint on subnational spending. Moldova is currently undergoing unprecedented reform of its system of intergovernmental fiscal relations, and consolidation of its local government. This reform package is crucial to ensure that decentralization does not increase the size of government.

Keywords: WP; government; government size; national government; State budget; fiscal federalism; Moldova; public goods; road tax; expenditure function; revenue-mobilization capacity; revenue mobilization capacity; budget imbalance; indicators of decentralization; nontax revenues from the revenue estimate; sharable revenue; Total expenditures; Revenue sharing (search for similar items in EconPapers)
Pages: 28
Date: 1999-12-01
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1999/176

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