Based on a unique data set on Russian city budgets, this paper shows that revenue sharing between regional and local governments provides local governments with no incentive to increase tax base or provide public goods. Any change in local government’s own revenues is almost entirely offset by changes in shared revenues. This leads to governmental over-regulation of private businesses. It is shown that fiscal incentives are a determinant of the formation of private business and the efficiency of public goods provision. The Russian federalism is compared to the Chinese federalism, where fiscal incentives reputedly are stronger in many provinces.
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Paper provided by Center for Economic and Financial Research (CEFIR) in its series Working Papers with number
w0001.
Length: 32 pages Date of creation: Jan 2000 Date of revision: Handle: RePEc:cfr:cefirw:w0001
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Find related papers by JEL classification: H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government H41 - Public Economics - - Publicly Provided Goods - - - Public Goods H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries P35 - Economic Systems - - Socialist Institutions and Their Transitions - - - Public Finance
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Philippe Aghion & Oliver D. Hart & John Moore, 1994.
"The Economics of Bankruptcy Reform,"
NBER Chapters,
in: Transition in Eastern Europe, Volume 2, The, pages 215-244
National Bureau of Economic Research, Inc.
[Downloadable!]
Gérard Roland & Thierry Verdier, 1999.
"Transition and the output fall,"
The Economics of Transition,
The European Bank for Reconstruction and Development, vol. 7(1), pages 1-28, March.
[Downloadable!] (restricted)
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