Incentive Effects of Fiscal Equalization: Has Russian Style Improved?

Abstract

The effects of inter-government fiscal arrangements on variation in regional economic growth are analyzed for Russia, a country with large cross-regional differences and considerable fiscal redistribution. Moreover, fiscal reforms implemented in the first half of 2000s, which followed to some extent scientific advice, make analysis of this case particularly interesting. We observe that post-reform fiscal redistribution became more rational and this resulted in fewer incentive distortions. We found no negative association between federal transfers and regional growth. Furthermore, there are no major differences between donor and recipient regions in the way how intergovernmental fiscal arrangements influence regional growth. Overall, fiscal policy variables have become less important growth determinants than it was the case in the 1990s. Still further reforms in federalism arrangements would be desirable.

Roving Bandits in Action: Outside Option and Governmental Predation in Autocracies

“…Second, the presence of outliers potentially driving the results is not a novel point for the studies of Russian federalism: a number of papers have explicitly derived the lists of outliers among Russian regions different from the rest of the federation in various characteristics (see DeJong 2003, 2005;Berkowitz and Jackson 2006;Buccellato 2007;Ledyaeva 2009;Glushchenko 2009;Freinkman et al 2011;Libman and Feld 2012;Libman 2012). Most typically, these outliers include the cities of Moscow and St. Petersburg and the oil-rich Tyumen region; in growth regressions abnormal behavior was typically shown by Chukotka, Ingushetiya and Kalmykia.…”

Roving Bandits in Action: Outside Option and Governmental Predation in Autocracies

“…Second, the presence of outliers potentially driving the results is not a novel point for the studies of Russian federalism: a number of papers have explicitly derived the lists of outliers among Russian regions different from the rest of the federation in various characteristics (see Berkowitz and DeJong , ; Berkowitz and Jackson ; Buccellato ; Ledyaeva ; Glushchenko ; Freinkman et al. ; Libman and Feld ; Libman ). Most typically, these outliers include the cities of Moscow and St. Petersburg and the oil‐rich Tyumen region; in growth regressions abnormal behavior was typically shown by Chukotka, Ingushetiya and Kalmykia.…”

Fiscal decentralization: the search for new approaches for the development of local government

“…Since the end of the last century, issues of fiscal decentralization and its impact on economic development have been actively discussed by the foreign scientific community, for example, the following questions are reflected in scientific publications: income redistribution -Garcia-Mila, Teresa; McGuire, Therese J.; Oates, Wallace E., 2018 [1], Zimmermann H., 2004 [2]; models of the possible impact of fiscal decentralization on economic growth - Davoodi, Zou, 1998 [3], Freinkman, Lev and Kholodilin, Konstantin A. and Thiessen, Ulrich, 2009 [4]; the correspondence between expenditures and own revenues of subnational authorities -Gemmell, Norman and Kneller, Richard and McGowan, Danny and Sanz, Ismael and Sanz-Sanz, José F 2013 [5] and others.…”