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

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  • 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
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    References listed on IDEAS

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    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.

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