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Local Fiscal Capacity in the New Members of the European Union: Is It Efficient?

  • Nikolay Patonov

    (South-West University “Neofit Rilski”, Bulgaria)

Purpose – This paper aims to analyze the efficiency of the fiscal capacity of the local governments in the new members of the EU. Design/methodology/approach – The impact of the locally collected taxes on economic growth is analyzed by the means of regression analysis. The GDP growth rate is adopted as a dependent variable in the model and its deviations are explained via tax instruments for building fiscal capacity. Findings – Strong positive effects on economy, when property taxes come in local budgets. Research limitations/implications – There are many factors affecting the economic growth, which are not included in the regression model. The effects of the charges levied by local governments also remain without estimation. Originality/Value – The study fills in the gap of research on the benefits of local fiscal capacity in the countries of interest.

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Article provided by ToKnowPress in its journal International Journal of Synergy and Research.

Volume (Year): 2 (2013)
Issue (Month): 1 ()
Pages: 57-70

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Handle: RePEc:tkp:ijsrsy:v:2:y:2012:i:1:p:57-70
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  1. Kneller, Richard & Bleaney, Michael F. & Gemmell, Norman, 1999. "Fiscal policy and growth: evidence from OECD countries," Journal of Public Economics, Elsevier, vol. 74(2), pages 171-190, November.
  2. 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.
  3. Zou, Heng-fu, 1996. "Taxes, Federal Grants, Local Public Spending, and Growth," Journal of Urban Economics, Elsevier, vol. 39(3), pages 303-317, May.
  4. Zhang, Tao & Zou, Heng-fu, 2001. "The growth impact of intersectoral and intergovernmental allocation of public expenditure: With applications to China and India," China Economic Review, Elsevier, vol. 12(1), pages 58-81.
  5. Shantayanan Devarajan & Vinaya Swaroop & Heng-fu Zou, 1996. "The composition of public expenditure and economic growth," CEMA Working Papers 77, China Economics and Management Academy, Central University of Finance and Economics.
  6. Akai, Nobuo & Sakata, Masayo, 2002. "Fiscal decentralization contributes to economic growth: evidence from state-level cross-section data for the United States," Journal of Urban Economics, Elsevier, vol. 52(1), pages 93-108, July.
  7. Widmalm, Frida, 2001. " Tax Structure and Growth: Are Some Taxes Better Than Others?," Public Choice, Springer, vol. 107(3-4), pages 199-219, June.
  8. Ulrich Thießen, 2000. "Fiscal Federalism in Western European and Selected Other Countries: Centralization or Decentralization? What Is Better for Economic Growth?," Discussion Papers of DIW Berlin 224, DIW Berlin, German Institute for Economic Research.
  9. Raj M. Desai & Lev M. Freinkman & Itzhak Goldberg, 2003. "Fiscal federalism and regional growth : evidence from the Russian Federation in the 1990s," Policy Research Working Paper Series 3138, The World Bank.
  10. Gary Woller & Kerk Phillips, 1998. "Fiscal decentralisation and IDC economic growth: An empirical investigation," Journal of Development Studies, Taylor & Francis Journals, vol. 34(4), pages 139-148.
  11. Woo Sik Kee, 1977. "Fiscal Decentralization and Economic Development," Public Finance Review, , vol. 5(1), pages 79-97, January.
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