Soft budget constraints and fiscal decentralization in the Russian Federation by Jesper Dannesboe

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Dissertation (M.Sc.) - University of Warwick, 1994.

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Statementby Jesper Dannesboe.
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Open LibraryOL19577572M

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Downloadable. The study has reviewed the experience of foreign countries in the sphere of implementation of respective measures designed to prevent the emergence of soft budget constraints imposed on subnational authorities in a situation of fiscal decentralization.

Also, a number of theoretic simulation models have been built and analyzed that describe the interactions arising between the. This is expressed by the several reports by the World Bank, the International Monetary Fund -IMF, and other donor agencies on the issue of fiscal federalism in Russia (see Desai et al., Author: Andrey Timofeev.

This often leads to difficulty in maintaining fiscal discipline. So-called soft budget constraints allow these subnational governments to expand expenditures without facing the full cost.

Until now, however, there has been little understanding of how decentralization leads to Format: Hardcover. A multi-country study of the conditions under which decentralized countries might ensure fiscal discipline. In many parts of the world, lower levels of government are taking over responsibilities from national authorities.

This often leads to difficulty in maintaining fiscal discipline. So-called soft budget constraints allow these subnational governments to expand expenditures without facing. China has been held up as a modern-day exemplar of ‘market-preserving federalism.’ This article challenges this popular belief by showing that its local governments face soft budget constraints.

Second, monetary centralization, together with fiscal decentralization, induces a conflict of interests and thus may harden budget constraints and reduce inflation (the "checks and balance effect"). Our analysis is used to interpret China's recent experience of transition to a market by: Soft Budget Constraints and German Federalism Jonathan Rodden At first glance, the Federal Republic of Germany appears to have one of the most decentralized public sectors in the world.

Together, the Länder (federal states) and the Gemeinden (local communities) are responsible for over sixty percent of total public sector spending. This book was set in Palatino by SNP Best-set Typesetter Ltd., Hong Kong.

Printed and bound in the United States of America. Library of Congress Cataloging-in-Publication Data Fiscal decentralization and the challenge of hard budget constraints / edited by Jonathan Rodden, Gunnar. In reality, soft budget constraints mostly in-volve a government, through the bailout of en-terprises and banks (public and private) or of lower-level governments.

This paper studies the relationship between forns Soft budget constraints and fiscal decentralization in the Russian Federation book federalism, that is, organizations of government involving some fiscal decentralization, and the degree of the soft budget.

of soft budget constraints on provincial governments, and section sets out the conclusions. Evolution of Intergovernmental Fiscal Relations, s—s — Fiscal Contract System (Tax-Sharing System) Inthe centralized fiscal regime was replaced with the fiscal con.

Chapter Systemic Soft Budget Constraints in Ukraine Sean O’Connell and Deborah Wetzel An important question for transition economies and especially Ukraine, is what is the proper degree of decentralization within a changing financial and economicculture, macroeconomic and political system.

Although the benefits associated with fiscal. Bailouts and Soft Budget Constraints in Decentralized Government: or fiscal equalization. We first we explain how the set-up of the developing “soft budget constraint” government, the standard version of a soft budget constraint in a federation is a model where subnational governments move first and the central government moves.

We study the relationship between the organization of government involving fiscal decentralization (i.e. federalism) and the degree of the soft budget constraint. The incentives of the government to bail out inefficient projects are determined by the trade-off between political benefits and (endogenous) economic costs.

Two effects of federalism are derived: First, fiscal. Fiscal Federalism in Russia: Soft Budget Constraints of Regional Governments. Edited by Sergey Sinelnikov-Murylev, Pavel Kadochnikov and Ilya Trunin.

in Books from Gaidar Institute for Economic Policy. Abstract: The study has reviewed the experience of foreign countries in the sphere of implementation of respective measures designed to prevent the emergence of soft budget constraints Cited by: 2. Decentralization and the challenge of hard budget constraints Reaping the benefits of decentralization requires mitigating its potential costs.

Since the early s fiscal and political decen- ernments to overborrow, overspend, or tralization have spread around the world. But undertax on. 5 II. DECENTRALIZATION, FISCAL BALANCES, AND PRIVATIZATION: BACKGROUND Decentralization can give rise to coordination problems, and these may eventually be manifested in soft budget constraints (SBC) (Kornai, ; Kornai et al., ).2 The expectation of federal bailouts in the event of a fiscal crisis weakens the budget constraint of.

International Political Science Review 33(4) Weingast argues that a de facto political arrangement has emerged in China whereby, even in the absence of constitutional guarantees, fiscal federalism promotes economic growth when sub-national governments face hard budget constraints and the predatory powers of the center are by: 1 ‘Fiscal Decentralization: how to harden the budget constraint§’ Massimo Bordignon (Catholic University of Milan) ♣ This is a revised version of a draft paper which I pres ented at the Workshop “Fiscal Surveillance in EMU: new issues and challenges”, Bruxelles, November This version benefited from the comments of my discussant, Teresa TerCited by:   Fiscal decentralization is likely to entail a bias in the budget process toward higher public expenses and deficits.

The paper reviews lessons drawn from the theoretical literature and international experience on the design of intergovernmental relations. The institutional setup should address the dual problem of "common tax resources" and "soft" budget constraints, where policies devised to Cited by: As a subfield of public economics, fiscal federalism is concerned with "understanding which functions and instruments are best centralized and which are best placed in the sphere of decentralized levels of government" (Oates, ).

In other words, it is the study of how competencies (expenditure side) and fiscal instruments (revenue side) are allocated across different (vertical) layers of. Fiscal Federalism Theory: a misleading path towards causes Theories of decentralization based on political motivations Establishing a new theoretical framework to.

2 Fiscal Decentralization: Benefits and Problems way. For the problem of decentralizing government activities, mobility across regions is a critical factor. This can be illustrated by considering the use of a head tax.

In a unitary state, the head tax does not distort economic decisionsFile Size: KB. Achievements and challenges of fiscal decentralization: lessons from Mexico (English) Abstract. This book documents Mexico's decentralization experience as well as conceptualizing its main trends, policies, and options, and brings them into the light of international comparison.

Alternatively, subnational governments may face soft budget constraints. In this case, governance may deteriorate because of the mismatch between subnational governments’ expenditure functions and revenue raising capacity.

Because of this mismatch, subnational spending may rise regardless of the tax autonomy facing subnational jurisdictions. Dewatripont and Maskin (), in the soft budget constraint literature.

In this paper, soft budget constraint syndrome arises when firms that are expected to lose money are financed. The paper highlights a trade-off between hard and soft budget constraints. While soft budget constraints.

In the present Master Thesis, written at the University of Bonn, the relationship between fiscal decentralization and regional economic growth is studied for the case of the Russian Federation. A rich panel dataset of 78 Russian regions during is gathered by the by: 1.

book is to take stock of the progress, problems, and potentials of fiscal decentralization in developing countries by bringing together a set of studies from a variety of countries around the world. Decentralization in developing countries sometimes seems to be viewed as either a panacea or a plague – either a cure for all the ills of such coun.

FISCAL SUSTAINABILITY ACROSS GOVERNMENT TIERS: AN ASSESSMENT OF SOFT BUDGET CONSTRAINTS 1. INTRODUCTION The ongoing process of shifting political powers to both supra-national and regional levels world-wide urges some insight in the process of fiscal decentralisation (Ter-Minassian, ; Wildasin, ).

The impact of fiscal decentralization: Issues in theory and challenges in practice. Mandaluyong City, Philippines: Asian Development Bank, 1.

Fiscal decentralization. Asian Development Bank. The views expressed in this publication are those of the authors and do Cited by: 2. Fiscal decentralization: How to achieve a hard budget constraint zPlan of the talk: z1.

The problem z2. Theory z3. Empirical evidence z4. Decentralization in Europe z5. Internal stability pact (The Italian case) 6. Policy recommendations. “Creating Incentives for Fiscal Discipline in the New South Africa.” In Fiscal Decentralization and the Challenge of Hard Budget Constraints, ed.

by Rodden, Jonathan, Eskeland, Gunnar, and Litvack, Jennie. Cambridge, MA: MIT Press, pp. –52Cited by: Fiscal decentralization forms the backbone of Myanmar’s efforts to strengthen public services, encourage development across the country, and secure peace and stability.

The country has made important first steps in the decentralization process, but as yetCited by: 7. Journal of Public Administration † Vol 41 no 2 † June to hard budget constraints and therefore, effective and prudent fiscal control are instituted. The practice of tax exporting provides incentives for expansion beyond efficiency levels but seriously affects the narrow tax base of neighboring jurisdictions.

The latter problem seems to be crucial. analysis of fiscal decentralization in Russian regions through the examination of trends in local governments' shares in main types of consolidated regional budget revenues and expenditures.

In Section 6, we suggest simple indicators of fiscal decentralization and subordination at the regional level and conduct their statistical analysis.

Fiscal Centralization and Decentralization in Russia and China Elliott Parker University of Nevada, Reno and Judith Thornton University of Washington Decem Abstract: In this paper we review the fiscal evolution of China and Russia, asking how the process of creating a separate, tax-financed public sector in the two countries differed.

decentralization takes place first and is followed by fiscal decentralization and then political decentralization, this sequence of reforms enhances the power of the national executive and sets serious fiscal constraints on subnational executives. To develop the argument, the article is organized in five sections.

The first sectionFile Size: KB. The question of what makes fiscal decentralization work is faced by many policymakers around the world. This book draws on both the relevant literature and policy and technical advice provided by the IMF to a wide range of member countries, and discusses the key factors that help make decentralization sustainable, efficient, and equitable from a macroeconomic perspective.

Fiscal Federalism is highly recommended.’ Robert Inman - The Wharton School ‘Boadway and Shah have provided the new definitive treatment of the principles of fiscal federalism against a rich background of the actual practice of fiscal decentralization in both industrialized and developing : Robin Boadway, Anwar Shah.

disadvantages of fiscal decentralization have been realized. Anecdotal evidence and case studies provide some insights, but additional policy experimentation and more systematic research are needed to understand more broadly the realities of and prospects for fiscal decentralization in developing countries.

soft budget constraints as a very general phenomenon. Judging from the empirical evidence, soft budget constraints are however not as pervasive as suggested by this analysis. The challenge is therefore less to explain soft budget constraints than to explain why they are not so prevalent under a capitalist Size: KB.

Rodden, Jonathan (b) “Soft Budget Constraints and German Federalism,” in Jonathan Rodden, Gunnar Eskeland and Jennie Litvack, eds, Fiscal Decentralization and the Challenge of Hard Budget Constraints (Cambridge MA MIT Press), pp.

–Author: Roy Bahl, Richard M. Bird.Decentralization in the Russian Federation Introduction The decentralization that took place in the Russian Federation in the course of economic and political reforms of the s was a spontaneous process that lacked a clearly defined strategy.

However, by the end of the century it had some significant achievements to its credit.Fiscal decentralization, revenue and expenditure assignments, and growth in China Jing Jina,1, Heng-fu Zoub,c,* a Central University of Finance and Economics, 39, South College Road, Haidian District, BeijingChina bPeking University and Wuhan University, China c Research Department, The World Bank, MC, H.

St. NW, Washington, DCUSA.

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