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Fiscal Federalism in Transition: Evidence from Ukraine

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  • Ulrich Thießen

Abstract

Effects of fiscal federalism on redistribution and economic growth are analyzed for Ukraine, a country with large regional differences. Since there is virtually no such empirical literature, except a study of the German case, and since there are several potential flaws, the results must be interpreted in a very tentative way. We find that this relatively poor, disorganized country with little democracy has effectively redistributed income from relatively wealthy to relatively poor regions and thus promoted regional economic convergence, and even dampened the recession in both types of regions. We also find that the evidence does not reject the view that relatively poor regions used the transfers in a growth-conducive fashion, and the paper argues that the findings may have implications beyond the case of Ukraine. But the analysis is tricky, uncertain, and merely a small step to an interesting research issue. Copyright Kluwer Academic Publishers 2004

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File URL: http://hdl.handle.net/10.1007/s10644-004-1055-3
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Bibliographic Info

Article provided by Springer in its journal Economics of Planning.

Volume (Year): 37 (2004)
Issue (Month): 1 (March)
Pages: 1-23

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Handle: RePEc:kap:ecopln:v:37:y:2004:i:1:p:1-23

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Web page: http://www.springerlink.com/link.asp?id=113294

Related research

Keywords: fiscal equalization; fiscal federalism;

References

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  1. Richard Bird & Caroline Freund & Christine Wallich, 1994. "Decentralization of Intergovernmental Finance in Transition Economies," Comparative Economic Studies, Palgrave Macmillan, vol. 36(4), pages 149-160, December.
  2. Massimo Bordignon & Paolo Manasse & Guido Tabellini, 2001. "Optimal Regional Redistribution under Asymmetric Information," American Economic Review, American Economic Association, vol. 91(3), pages 709-723, June.
  3. Malcolm Knight & Norman Loayza & Delano Villanueva, 1993. "Testing the Neoclassical Theory of Economic Growth: A Panel Data Approach," IMF Staff Papers, Palgrave Macmillan, vol. 40(3), pages 512-541, September.
  4. Mariano Tommasi & Sebastian Saiegh & Pablo Sanguinetti, 2001. "Fiscal Federalism in Argentina: Policies, Politics, and Institutional Reform," JOURNAL OF LACEA ECONOMIA, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
  5. Wallace E. Oates, 1999. "An Essay on Fiscal Federalism," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1120-1149, September.
  6. Robert J. Barro & Xavier Sala-i-Martin, 1991. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 107-182.
  7. Michael Smart, 1998. "Taxation and Deadweight Loss in a System of Intergovernmental Transfers," Canadian Journal of Economics, Canadian Economics Association, vol. 31(1), pages 189-206, February.
  8. John M. Litwack, 2001. "Central Control of Regional Budget: Theory with Applications to Russia," OECD Economics Department Working Papers 275, OECD Publishing.
  9. Barro, Robert J & Sala-i-Martin, Xavier, 1992. "Convergence," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 223-51, April.
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