Federalism, but how? The impact of vertical fiscal imbalance on economic growth. Evidence from Belgium*

Mitra, Alessio; Chymis, Athanasios

doi:10.1111/ecpo.12200

Cited by 6 publications

(3 citation statements)

References 67 publications

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“…Many studies have verified the positive spatial spillover effect of GF from the perspective of the ecological environment [44,45], but the negative spatial spillover effect of GF is verified in the index of HQD constructed by considering the ecological environment and economic growth, which seems to verify the existence of "greenwashing" behavior in the production process of enterprises from the side [46]. The negative impact of VFI is also consistent with the findings based on data from European countries [47,48], indicating that there is no country heterogeneity in the negative impact of VFI, which also warns that managers should be alert to the many negative impacts of VFI on the long-term sustainable development of the economy and society.…”

Section: Discussionsupporting

confidence: 80%

The Impact of Green Finance on High-Quality Economic Development in China: Vertical Fiscal Imbalance as the Moderating Effect

Zhao

2023

Sustainability

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The vigorous development of green finance has become a national strategy in China. Green finance is gradually becoming a key driver of high-quality economic development and a key area of concern for China’s economy and ecological environment. Based on the panel data of 30 Chinese provinces from 2001 to 2019, we analyzed the impact and mechanism of vertical fiscal imbalance (VFI) and green finance (GF) on high-quality economic development (HQD) and then used the fixed-effect model and spatial Durbin model for empirical testing. We found that GF can significantly contribute to HQD, but VFI has a negative moderating effect in contrast to the positive effect of GF on HQD. This negative moderating effect is strongest in the central region. According to the analysis of the spatial econometric model based on geography, economy, and the nested spatial weight matrix, we found that the local GF has a negative spatial transmission effect on the HQD of other regions. Therefore, it is recommended that the coordinated development of green finance among regions be promoted, while affairs and expenditure responsibilities be reasonably distributed between the central and local governments to drive HQD effectively.

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Section: Discussionsupporting

confidence: 80%

The Impact of Green Finance on High-Quality Economic Development in China: Vertical Fiscal Imbalance as the Moderating Effect

Zhao

2023

Sustainability

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“…Many researchers have explored the economic consequences of VFIs from different perspectives. From an economic growth perspective, VFIs can harm economic growth (Mitra and Chymis 2022 ). Belgium’s constitutional federalism reform of 1993 contributed to an increase in the level of VFIs, thereby undermining economic growth.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

How do vertical fiscal imbalances affect energy efficiency? The role of government spending on science and technology

Feng

Liu²,

2023

Environ Sci Pollut Res

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How to improve energy efficiency is a practical issue of common concern around the world. In China, vertical fiscal imbalances (VFIs) generated under the existing fiscal system may have a significant impact on energy efficiency through government spending on science and technology (S&T). However, this potential relationship has not been explored in the literature. In this work, we aim to address this gap. Using Chinese provincial panel data from 2001 to 2017, this study empirically examines the relationship between VFIs and energy efficiency through a mediation model. The results show that VFIs greatly suppress energy efficiency. We further find that VFIs indirectly affect energy efficiency by reducing government spending on S&T. The results show significant regional heterogeneity. The intermediary role of government S&T expenditure is more significant in inland areas than in coastal areas. Therefore, to improve energy efficiency and achieve sustainable development, the Chinese government should focus on innovative reform of the existing fiscal system and reduce VFIs. In addition, the government should focus on fiscal spending in the field of S&T to promote technological innovation to guarantee the improvement of energy efficiency. Inland areas should pay particular attention to this issue.

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“…R. Boadway (2006) describes it as "the most relevant indicator of the degree of decentralization". Indeed, even under a subnational spending autonomy, a centralized tax system might have a negative impact on economic growth (Mitra A., Chymis A., 2021).…”

Section: Discussionmentioning

confidence: 99%

The impact of institutions on regional credit ratings in Russia

Mikhaylova

Timushev

2022

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Relevance. Institutions of a fiscal system play a significant role in regional credit ratings. This is reflected in the low creditworthiness of Russian regions from the international perspective. Research objective. The paper discusses the role of the institutional factors in the credit ratings assigned to Russian regions by Russian and international agencies. Data and Methods. The study analyzes the rating methodology adopted by Russian and international credit rating agencies and tests the presence of the institutional factors by conducting a formal regression analysis based on the data from the budgetary systems of Russia and the United States. Results. We demonstrate that international agencies value institutional factors, while Russian agencies use formal quantitative indicators. By applying comparative regression analysis to the economic and fiscal indicators of Russian regions and U.S. states, we found that The Big Three (Fitch Ratings, S&P Global Ratings and Moody's Investors Service) rate Russian regions lower than U.S. states, although the formal indicators between the two fiscal systems at the regional level do not differ as much. Conclusions. We conclude that the lower creditworthiness of Russian regions in the international perspective reflects the weakness of the institutions in the Russian budgetary system. Practically, the assessment of regional creditworthiness in Russia by the international agencies highlights the areas of intergovernmental fiscal relations that need improvement, most notably the insufficient tax and spending autonomy of local and regional governments.

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Federalism, but how? The impact of vertical fiscal imbalance on economic growth. Evidence from Belgium*

Cited by 6 publications

References 67 publications

The Impact of Green Finance on High-Quality Economic Development in China: Vertical Fiscal Imbalance as the Moderating Effect

The Impact of Green Finance on High-Quality Economic Development in China: Vertical Fiscal Imbalance as the Moderating Effect

How do vertical fiscal imbalances affect energy efficiency? The role of government spending on science and technology

The impact of institutions on regional credit ratings in Russia

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