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Fiscal Federalism and Government Size in Transition Economies: The Case of Moldova

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  • International Monetary Fund

Abstract

This paper examines the relationship between fiscal decentralization—the assignment of revenue sources and expenditure functions across government levels—and government size in Moldova. The empirical results—based on data for a cross-section of Moldovan subnational governments in 1998—suggest that fiscal decentralization is associated with larger subnational governments and that the country’s revenue-sharing system imposes a constraint on subnational spending. Moldova is currently undergoing unprecedented reform of its system of intergovernmental fiscal relations, and consolidation of its local government. This reform package is crucial to ensure that decentralization does not increase the size of government.

Suggested Citation

  • International Monetary Fund, 1999. "Fiscal Federalism and Government Size in Transition Economies: The Case of Moldova," IMF Working Papers 1999/176, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1999/176
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=3368
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    Cited by:

    1. Paolo Liberati & Agnese Sacchi, 2013. "Tax decentralization and local government size," Public Choice, Springer, vol. 157(1), pages 183-205, October.

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