Regional Economics: Theory and Practice

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The concept of behavioral finance as applied to the analysis of territorial fiscal policy

Vol. 17, Iss. 1, JANUARY 2019

Received: 22 October 2018

Received in revised form: 19 November 2018

Accepted: 17 December 2018

Available online: 16 January 2019


JEL Classification: H30, H72, H79

Pages: 16–33

Levina V.V. Tula State University, Tula, Russian Federation

ORCID id: not available

Subject The article investigates the impact of objective and subjective factors on the efficiency of fiscal policy of regions and municipalities.
Objectives The aim is to analyze various aspects of regional fiscal policy from the perspective of applicability of the theory of behavioral economics thereto, and to develop proposals for adequate consideration of subjective factors in the fiscal policy of the constituent entities of the Russian Federation and municipalities.
Methods In the study, I apply general scientific principles of structured system analysis and a structural-functional analysis. When reviewing the characteristics of particular constituent entities of the Russian Federation and municipalities, I employ comparative and dialectical methods, which, in combination, enable to identify common and specific features of territorial fiscal policy.
Results The paper distinguishes focal points of territorial fiscal policy, in which the impact of subjective factors in the process of making budget decisions is most pronounced. It also offers areas for improving the inter-municipal cooperation and distributing the inter-budget transfers from the budget of the constituent entity of the Russian Federation, considering the need to identify and coordinate the interests of stakeholders.
Conclusions The proposals will allow making reasonable changes in certain aspects of regional and municipal fiscal policy to improve the efficiency of inter-budget regulation, to spread the practice of self-taxation and initiative budgeting.

Keywords: behavioral finance, regional budget, local budget, inter-budget transfer, economic interests


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