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Modelling Intergovernmental Fiscal Equalisation in Zimbabwe — Towards Resolving Vertical and Horizontal Fiscal Imbalances

Author

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  • Chakunda, Vincent
  • Dzingirai, Canicio
  • Chikerema, Arthur

Abstract

The paper deploys a mixed method approach in modelling intergovernmental fiscal equalisation in Zimbabwe. The desirability of the proposed fiscal capacity model is premised on the argument that the anecdotal vertical fiscal imbalance is a structural issue whose antidote is reassignment of revenue or expenditure responsibilities among different governmental tiers. The fiscal capacity model, as we have proposed, is underpinned by five variables, namely, total amount to be allocated as declared in the national budget, poverty index (poverty prevalence rate), population of the area, size of the local economy (revenue/GDP ratio) and the estimated intrinsic value of the sub-soil natural resource endowments of the area.

Suggested Citation

  • Chakunda, Vincent & Dzingirai, Canicio & Chikerema, Arthur, 2021. "Modelling Intergovernmental Fiscal Equalisation in Zimbabwe — Towards Resolving Vertical and Horizontal Fiscal Imbalances," Public Finance Quarterly, Corvinus University of Budapest, vol. 66(4), pages 535-550.
    • Handle: RePEc:pfq:journl:v:66:y:2021:i:4:p:535-550
    DOI: https://doi.org/10.35551/PFQ_2021_4_5
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    More about this item

    Keywords

    intergovernmental fiscal equalisation; intergovernmental transfers; vertical fiscal imbalance; horizontal fiscal imbalance; fiscal capacity model; poverty index; subnational government;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

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