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

December 1, 1999

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Fiscal Federalism and Government Size in Transition Economies: The Case of Moldova, (USA: International Monetary Fund, 1999) accessed September 18, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Expenditure, Fiscal federalism, Fiscal policy, Revenue administration, Revenue sharing, Taxes, Total expenditures

Keywords: Budget imbalance, Expenditure function, Fiscal federalism, Government, Government size, Indicators of decentralization, Moldova, National government, Nontax revenues from the revenue estimate, Public goods, Revenue mobilization capacity, Revenue sharing, Revenue-mobilization capacity, Road tax, Sharable revenue, State budget, Total expenditures, WP

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1999/176
Stock No:

WPIEA1761999
ISBN:

9781451858792
ISSN:

1018-5941

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