Regional Economics: Theory and Practice

Abstracting and Indexing

Referativny Zhurnal VINITI RAS
LCCN Permalink
Google Scholar

Online available



Cyberleninka (12 month OA embargo)

Fiscal decentralization and fiscal discipline

Vol. 17, Iss. 8, AUGUST 2019

Received: 16 May 2019

Received in revised form: 30 May 2019

Accepted: 30 June 2019

Available online: 15 August 2019


JEL Classification: E62, H62, H77

Pages: 1557–1576

Alekhin B.I. Russian State University for Humanities (RSUH), Moscow, Russian Federation

Subject The article focuses on the fiscal discipline and regions' fiscal balance indicating their aptitude to comply with the fiscal discipline.
Objectives The research evaluates how fiscal decentralization influences the fiscal balance. Thus, I referred to official sources to compile the timed panel data on 81 subjects of the Russian Federation for 2006–2017.
Methods The array of variables was specified through the Granger causality test. The empirical model was evaluated with the systemic generalized method of moments.
Results Fiscal decentralization is not associated with the weakening fiscal discipline. Overcentralization makes fiscal constrains even more stringent by delegating the spending power implying the centralized finance, meticulous segregation of regions’ rights and obligations and federal financial control. I discovered the positive correlation of fiscal discipline and fiscal independence of regions. Regions were noted to have a better fiscal balance when the percentage of regional taxes increased in their revenue. Measured with a gap between the decentralization of expenditures and revenue, a decreasing disparity in fiscal decentralization also induces a better balance.
Conclusions and Relevance The findings echo the commitment to tightening fiscal restrictions of regions by making them more fiscally autonomous, specifying and standardizing the terms on which financial aid is provided to regions.

Keywords: fiscal decentralization, fiscal deficit, regions


  1. Oates W.E. On the Theory and Practice of Fiscal Decentralization. IFIR Working Paper, 2006, no. 5, 36 p. URL: Link
  2. Sorens J. Vertical Fiscal Gaps and Economic Performance: A Theoretical Review and an Empirical Meta-Analysis. Mercatus Working Paper, February 2016, 41 p. URL: Link
  3. Rodden J. The Dilemma of Fiscal Federalism: Grants and Fiscal Performance around the World. American Journal of Political Science, 2002, vol. 46, no. 3, pp. 670–687. URL: Link
  4. Greene W.H. Econometric Analysis. 5-th Edition. Upper Saddle River, New Jersey, Prentice Hall, 2003, 1238 p.
  5. Blundell R., Bond S., Windmeijer F. Estimation in Dynamic Panel Data Models: Improving on the Performance of the Standard GMM Estimators. The Institute for Fiscal Studies. Working Papers, 2000, no. 12, 49 p. URL: Link
  6. De Mello L.R. Fiscal Decentralization and Intergovernmental Fiscal Relations: A Cross-Country Analysis. World Development, 2000, vol. 28, iss. 2, pp. 365–380. URL: Link00123-0
  7. Rodden J., Wibbels E. Beyond the Fiction of Federalism: Macroeconomic Management in Multitiered Systems. World Politics, 2002, vol. 54, iss. 4, pp. 494–531. URL: Link
  8. Neyapti B. Fiscal Decentralization and Deficits: International Evidence. European Journal of Political Economy, 2010, vol. 26, iss. 2, pp. 155–166. URL: Link
  9. Baskaran T. On the Link Between Fiscal Decentralization and Public Debt in OECD Countries. Public Choice, 2010, vol. 145, iss. 3-4, pp. 351–378. URL: Link
  10. Eyraud L., Lusinyan L. Decentralizing Spending More than Revenue: Does it Hurt Fiscal Performance? IMF Working Paper, 2011, no. 226, 33 p. URL: Link
  11. Sow M., Razafimahefa I. Fiscal Decentralization and Fiscal Policy Performance. IMF Working Paper, 2017, no. 64, 30 p. URL: Link
  12. Huayan Y., Di Z., Bing C. The Contribution of Fiscal/Financial Decentralization to the Debt Expansion of the Local Financing Platform. IOP Conference. Series: Earth and Environmental Science, 2018, vol. 113, conf. 1. URL: Link
  13. Akindinova N., Chernyavskii A., Chepel' A. [Analysis of regional fiscal balance]. Voprosy Ekonomiki, 2016, no. 10, pp. 31–48. (In Russ.) URL: Link
  14. Bukharskii V.V., Vetrova E.Yu., Lavrov A.M. [Correlation analysis of the debt burden on the budgets of the Russian Federation subjects in 2005–2016]. Nauchno-issledovatel'skii finansovyi institut. Finansovyi zhurnal = Financial Research Institute. Financial Journal, 2017, no. 6, pp. 9–24. URL: Link (In Russ.)
  15. Andryakov A.D. [Balance and Sustainability of Regional Budgets in 2008-2016]. Nauchno-issledovatel'skii finansovyi institut. Finansovyi zhurnal = Financial Research Institute. Financial Journal, 2017, no. 6, pp. 25–39. URL: Link (In Russ.)

View all articles of issue


ISSN 2311-8733 (Online)
ISSN 2073-1477 (Print)

Journal current issue

Vol. 18, Iss. 2
February 2020