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Evaluating the current equalization grant to counties in Croatia

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  • Mihaela Bronic

    (Institute of Public Finance, Zagreb)

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    Abstract

    This paper assesses the design of the 2005 equalization grant to the counties in Croatia. Since no allocation formula for this grant has ever been publicly disclosed, this paper provides an analysis and explanation of the aforesaid formula. At the time of its introduction, the objective of the equalization grant was to mitigate differences in fiscal capacities among counties, so our work is focused on fiscal capacities and on whether the new formal allocation rule set by the central government follows the predetermined objective in the grant allocation. This article proves our hypothesis that the new equalization grant does not adequately mitigate the differences in fiscal capacities across Croatian counties.

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    File URL: http://www.ijf.hr/eng/FTP/2010/1/bronic.pdf
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    Bibliographic Info

    Article provided by Institute of Public Finance in its journal Financial Theory and Practice.

    Volume (Year): 34 (2010)
    Issue (Month): 1 ()
    Pages: 25-52

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    Handle: RePEc:ipf:finteo:v:34:y:2010:i:1:p:25-52

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    Keywords: counties; fiscal capacity; equalization grant; Croatia;

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    1. Jorge Martinez-Vazquez & LF Jameson Boex, 1997. "An Analysis of Alternative Measures of Fiscal Capacity for Regions of the Russian Federation," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper9704, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    2. Jorge Martinez-Vazquez & Cristian SepĂșlveda & Gabriel Leonardo & Benjamin Miller, 2006. "Intergovernmental Fiscal Relations in Romania: Challenges and Options for Reform," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0619, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    3. Jorge Martinez-Vazquez & LF Jameson Boex, 1997. "Fiscal Capacity: An Overview of Concepts and Measurements Issues and Their Applicability in the Russian Federation," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper9703, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    4. Ebel, Robert D. & Yilmaz, Serdar, 2002. "On the measurement and impact of fiscal decentralization," Policy Research Working Paper Series 2809, The World Bank.
    5. International Monetary Fund, 2004. "Toward More Effective Redistribution," IMF Working Papers 04/98, International Monetary Fund.
    6. Anto Bajo & Mihaela Bronic, 2007. "Assessments of the Effectiveness of the Croatian Fiscal Equalisation Model," Financial Theory and Practice, Institute of Public Finance, vol. 31(1), pages 1-26.
    7. Jameson Boex & Jorge Martinez-Vazquez, 2004. "Designing Intergovernmental Equalization Transfers with Imperfect Data: Concepts, Practices, and Lessons," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0421, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    8. Jameson Boex & Jorge Martinez-Vazquez & Andrey Timofeev, 2006. "An Assessment of Fiscal Decentralization in Armenia," Problems of Economic Transition, M.E. Sharpe, Inc., vol. 49(1), pages 5-50, May.
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