Central Control of Regional Budget : Theory with Applications to Russia

John M. Litwack

Organisation for Economic Co-operation and Development

关键词: intergovernmental relations;    Russian economy;    fiscal decentralisation;   

DOI  :  https://doi.org/10.1787/560325048014

学科分类：社会科学、人文和艺术（综合）

来源: OECD iLibrary

【 摘 要 】

Motivated by the recent experience in the Russian Federation, this paper examines the implications of imposing central control on the budgetary activities of a subnational government. In a highly stylised multi-task principal-agent model (Holmstrom and Milgrom (1991)), a central government cannot directly monitor the informal budgetary operations of a regional administration, but seeks to improve fiscal policies by exerting control over a “formal” regional budget and imposing (limited) costs on informal behaviour. In the static case of the model, the control of subnational budgetary operations by a benevolent central government may increase social welfare, but at the expense of higher (implicit and explicit) taxation of economic organisations in the region, lower output, and a strong orientation of informal policies toward rent seeking activities. The additional imposition of costs on regions for conducting informal budgetary operations has multiple (indeterminate) effects in ...