IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v47y2019i4p679-717.html
   My bibliography  Save this article

Fiscal Decentralization, Budget Discipline, and Local Finance Reform in Russia’s Regions

Author

Listed:
  • Michael Alexeev
  • Nikolay Avxentyev
  • Arseny Mamedov
  • Sergey G. Sinelnikov-Murylev

Abstract

Using a panel of Russian regions, we estimate the link between intraregional fiscal decentralization and regional budget deficits. Although Russia’s regions are not as autonomous (either politically or fiscally) as regions in some other federal states, we obtain robust and statistically and economically significant results. Specifically, expenditure decentralization has a positive effect on consolidated regional budget balances, while transfer dependence of municipalities is associated with higher deficits. The impact of revenue decentralization depends on whether a regional government can use its tax revenue assignments with the same high degree of discretion that generally characterizes explicit fiscal transfers. We show that a 2009 local finance reform that limited the discretion of regional governments to assign regional tax revenue to municipalities has changed the effect of tax decentralization on budget discipline.

Suggested Citation

  • Michael Alexeev & Nikolay Avxentyev & Arseny Mamedov & Sergey G. Sinelnikov-Murylev, 2019. "Fiscal Decentralization, Budget Discipline, and Local Finance Reform in Russia’s Regions," Public Finance Review, , vol. 47(4), pages 679-717, July.
    • Handle: RePEc:sae:pubfin:v:47:y:2019:i:4:p:679-717
    DOI: 10.1177/1091142118804245
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/1091142118804245
    Download Restriction: no
    File URL: https://libkey.io/10.1177/1091142118804245?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Zareh Asatryan & Lars Feld & Benny Geys, 2015. "Partial fiscal decentralization and sub-national government fiscal discipline: empirical evidence from OECD countries," Public Choice, Springer, vol. 163(3), pages 307-320, June.
    2. Zhuravskaya, Ekaterina V., 2000. "Incentives to provide local public goods: fiscal federalism, Russian style," Journal of Public Economics, Elsevier, vol. 76(3), pages 337-368, June.
    3. Olivier Blanchard & Andrei Shleifer, 2001. "Federalism With and Without Political Centralization: China Versus Russia," IMF Staff Papers, Palgrave Macmillan, vol. 48(4), pages 1-8.
    4. Foremny, Dirk, 2014. "Sub-national deficits in European countries: The impact of fiscal rules and tax autonomy," European Journal of Political Economy, Elsevier, vol. 34(C), pages 86-110.
    5. Thushyanthan Baskaran, 2010. "On the link between fiscal decentralization and public debt in OECD countries," Public Choice, Springer, vol. 145(3), pages 351-378, December.
    6. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
    7. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    8. Alexeev, Michael & Weber, Shlomo (ed.), 2013. "The Oxford Handbook of the Russian Economy," OUP Catalogue, Oxford University Press, number 9780199759927.
    9. Schaltegger, Christoph A. & Feld, Lars P., 2009. "Are fiscal adjustments less successful in decentralized governments?," European Journal of Political Economy, Elsevier, vol. 25(1), pages 115-123, March.
    10. Michael Alexeev & Shlomo Weber, 2013. "Russian economy, the," The New Palgrave Dictionary of Economics,, Palgrave Macmillan.
    11. Markus Freitag & Adrian Vatter, 2008. "Decentralization and Fiscal Discipline in Sub-national Governments: Evidence from the Swiss Federal System," Publius: The Journal of Federalism, CSF Associates Inc., vol. 38(2), pages 272-294, Spring.
    12. Mr. Luc Eyraud & Ms. Anita Tuladhar & Mr. Julio Escolano & Ms. Marialuz Moreno Badia & Ms. Juliane Sarnes, 2012. "Fiscal Performance, Institutional Design and Decentralization in European Union Countries," IMF Working Papers 2012/045, International Monetary Fund.
    13. Eyraud, Luc & Lusinyan, Lusine, 2013. "Vertical fiscal imbalances and fiscal performance in advanced economies," Journal of Monetary Economics, Elsevier, vol. 60(5), pages 571-587.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vladislav V. Bukharsky, 2021. "Fiscal Decentralization and Incentives of Local Authorities in the Russian Federation," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 2, pages 114-129, April.
    2. Бухарский В. В. & Лавров А. М., 2021. "Межбюджетные Отношения И Государственное Управление: Возможности И Ограничения Децентрализации," Вопросы государственного и муниципального управления // Public administration issues, НИУ ВШЭ, issue 2, pages 126-153.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Grażyna Bukowska & Joanna Siwińska-Gorzelak, 2016. "Can fiscal decentralisation curb fiscal imbalances?," Working Papers 2016-35, Faculty of Economic Sciences, University of Warsaw.
    2. David Bartolini & Agnese Sacchi & Simone Salotti & Raffaella Santolini, 2018. "Fiscal Decentralization in Times of Financial Crises," CESifo Economic Studies, CESifo Group, vol. 64(3), pages 456-488.
    3. Santiago Lago-Peñas & Jorge Martinez-Vazquez & Agnese Sacchi, 2020. "Fiscal stability during the Great Recession: putting decentralization design to the test," Regional Studies, Taylor & Francis Journals, vol. 54(7), pages 919-930, July.
    4. Ananya Kotia & Victor Duarte Lledo, 2016. "Do Subnational Fiscal Rules Foster Fiscal Discipline? New Empirical Evidence from Europe," IMF Working Papers 2016/084, International Monetary Fund.
    5. Michael Alexeev, 2016. "Fiscal Incentives in Federations: Russia and the US Compared," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 58(4), pages 485-506, December.
    6. Michael Klien & Hans Pitlik & Matthias Firgo & Ulrike Famira-Mühlberger, 2020. "Ein Modell für einen strukturierten vertikalen Finanzausgleich in Österreich," WIFO Studies, WIFO, number 65854.
    7. Oto-Peralías, Daniel & Romero-Ávila, Diego & Usabiaga, Carlos, 2013. "Does fiscal decentralization mitigate the adverse effects of corruption on public deficits?," European Journal of Political Economy, Elsevier, vol. 32(C), pages 205-231.
    8. Alexeev, Michael & Chernyavskiy, Andrey, 2018. "A tale of two crises: Federal transfers and regional economies in Russia in 2009 and 2014–2015," Economic Systems, Elsevier, vol. 42(2), pages 175-185.
    9. Borge, Lars-Erik & Hopland, Arnt O., 2020. "Less fiscal oversight, more adjustment," European Journal of Political Economy, Elsevier, vol. 63(C).
    10. Chen, Zhiyuan & Li, Yong & Zhang, Jie, 2016. "The bank–firm relationship: Helping or grabbing?," International Review of Economics & Finance, Elsevier, vol. 42(C), pages 385-403.
    11. Fengqin Qin, 2022. "Fiscal Expenditure Structure, Vertical Fiscal Imbalance and Environmental Pollution," IJERPH, MDPI, vol. 19(13), pages 1-21, July.
    12. Qichun He & Meng Sun, 2018. "Does Fiscal Decentralization Increase the Investment Rate? Evidence from Chinese Panel Data," Annals of Economics and Finance, Society for AEF, vol. 19(1), pages 75-101, May.
    13. Jochimsen, Beate & Raffer, Christian, 2020. "Local Government Fiscal Regulation in the EU: The Impact of Balanced Budget Rules," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224566, Verein für Socialpolitik / German Economic Association.
    14. Andrea Filippetti & Agnese Sacchi, 2016. "Decentralization and economic growth reconsidered: The role of regional authority," Environment and Planning C, , vol. 34(8), pages 1793-1824, December.
    15. Junxue Jia & Siying Ding & Yongzheng Liu, 2018. "Decentralization, Incentives, and Tax Enforcement," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1819, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    16. Caldeira, Emilie, 2012. "Yardstick competition in a federation: Theory and evidence from China," China Economic Review, Elsevier, vol. 23(4), pages 878-897.
    17. Michael Alexeev & Andrey Chernyavskiy, 2019. "The impact of institutional quality on manufacturing sectors in Russia: panel data analysis," CAEPR Working Papers 2019-004, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.
    18. Serhan Cevik, 2017. "Size matters: fragmentation and vertical fiscal imbalances in Moldova," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 44(2), pages 367-381, May.
    19. Dirk Foremny & Agnese Sacchi & Simone Salotti, 2017. "Decentralization and the duration of fiscal consolidation: shifting the burden across layers of government," Public Choice, Springer, vol. 171(3), pages 359-387, June.
    20. Alexeev, Michael & Chernyavskiy, Andrey, 2015. "Taxation of natural resources and economic growth in Russia's regions," Economic Systems, Elsevier, vol. 39(2), pages 317-338.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:pubfin:v:47:y:2019:i:4:p:679-717. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.