Alma Idah, R. Biroum Bernardianto, Suffianor Suffianor
This study offers a thorough summary of the state of research in the area of local government finance by conducting a systematic literature review. Drawing on 25 years of pertinent publications in the subject of public budgeting and finance, the study addresses a variety of topics, such as capital budgeting, budgeting and budget reform, intergovernmental finance, financial management, and alternative service delivery. Scopus was used to gather the data, and 580 articles were deemed suitable for additional examination. The data were analyzed using Bibliometric approach. The analysis highlights China, the United States, and the United Kingdom as dominant contributors, with a strong focus on topics such as fiscal decentralization, local government finance, and governance efficiency. The author collaboration network reveals fragmented clusters, with limited interconnections among researchers, emphasizing the need for broader global and interdisciplinary collaborations. Additionally, the findings underscore the growing importance of emerging themes such as sustainability, digital governance, and AI-driven fiscal management, which remain underexplored. Geographical imbalances in research output further highlight the need for greater representation from underrepresented regions, including Africa, South America, and parts of Asia. Policymakers and practitioners who want to keep up with the most recent advancements and industry best practices in local government finance will also benefit from it.
This article examines the critical issue of ensuring the financial stability of Ukraine’s public finance system amid wartime challenges and national post-war recovery. The study aims to analyze key threats and vulnerabilities – such as the rapid rise in debt burden, sharp decline in budget revenues, and escalating needs for defense and social expenditures – and to propose conceptual, strategic approaches to developing a sustainable and effective state financial policy. The research argues for the importance of balancing various budget financing sources, strengthening the domestic government debt market, and enhancing transparency and institutional capacity within public finance management. In wartime and post-war contexts, financial stability must be viewed as a multidimensional concept, encompassing economic, institutional, and socio-political dimensions. Its achievement demands a combination of anti-crisis measures and a long-term, recovery-oriented modernization strategy. Based on the analysis, the article substantiates the need to revisit intergovernmental fiscal relations, develop instruments to reinforce public trust in institutions, and create financial tools capable of supporting sustainable post-war reconstruction. The findings underscore several unresolved challenges: the optimal mix between debt and internal revenues, the role of fiscal decentralization and local government autonomy, the effectiveness of tax administration, and combating corruption through enhanced oversight and civic engagement. The article highlights the strategic shift in budgetary priorities toward defense, recovery, and longterm development, and emphasizes the dual role of public finance – as both a crisis buffer and a catalyst for modernization, particularly through public–private partnerships and specialized recovery funds. The institutional dimension is decisive: robust mechanisms of control, risk management systems, digitalization of budget processes, and independent fiscal institutions are prerequisites for financial stability. The ability of Ukraine’s public finance system to maintain stability under extreme uncertainty depends on its resilience, multifaceted adaptability, and legitimacy. By diversifying revenue sources, reinforcing institutional frameworks, and guiding spending toward strategic recovery, public finance can become the foundation of long-term sustainable growth and societal trust.
Local self-governments, as a form of exercising and realizing citizens' authority, have access to certain material resources that serve the purpose of performing their original and constitutionally guaranteed functions. As decentralized levels of state power, local self-governments regulate and execute legally assigned tasks in the interest of their citizens, for which they require appropriate financial resources. The methods of financing local self-governments in the Republic of Serbia are regulated by legislation and guaranteed by the Constitution. There are several methods for financing local self-governments, i.e., for securing funds for municipalities, cities, and the City of Belgrade. This paper focuses on various methods of financing local self-governments, with particular attention to non-earmarked transfers from the national budget of the Republic of Serbia. The aim of the paper is to highlight the importance of national budget financing of local self-governments, as well as the need for its reform.
Government budgeting and expenditure policies play a central role in shaping national economic trajectories, influencing fiscal sustainability, and determining the quality of public services. This article provides a comprehensive review of the multifaceted effects of public budgeting, addressing key issues such as the impact of government spending on economic growth, the dynamics of budget deficits and public debt sustainability, and the roles of fiscal rules, gender budgeting, and political cycles. Additional attention is given to the effectiveness of performance-based budgeting, the challenges of balancing budgets in welfare states, and the implications of military spending, budget transparency, and participatory budgeting on governance and public trust. Further discussions analyze how fiscal decentralization, off-budget expenditures, and differing budgeting frameworks between federal and unitary states affect long-term economic stability and public finance. By synthesizing empirical and theoretical insights, this article offers policy recommendations to enhance fiscal discipline, encourage citizen engagement, and promote sustainable economic growth.
This paper examines the public finance management (PFM) systems of Türkiye and the United States, highlighting their contrasting approaches to fiscal governance. Türkiye employs a centralized system influenced by European Union frameworks, with a strong emphasis on fiscal discipline and medium-term planning. In contrast, the United States operates a decentralized model, characterized by transparency, citizen engagement, and state-level autonomy. The study explores key metrics, including debt-to-GDP ratios, fiscal transparency rankings, and tax collection efficiency. While Türkiye’s system excels in strategic planning, it faces challenges in decentralization and public participation. Conversely, the U.S. boasts robust transparency mechanisms but struggles with growing national debt and fiscal disparities among states. By analyzing these systems, the paper identifies areas for mutual learning, recommending a balanced integration of transparency, participation, and strategic planning to enhance public finance governance in both nations.
Indonesia’s fiscal decentralization framework has evolved substantially since the 1998 Reformasi era; however, its capacity to ensure equitable and sustainable development remains debatable. This study analyzes the intricate dynamics of fiscal decentralization within Indonesia’s development financi
This paper critically examines Pakistan’s fiscal federalism and highlights the challenges posed by the 18th Constitutional Amendment 2010. The research is contextualized within the broader theoretical framework of fiscal federalism. Although intended to decentralize power and grant fiscal autonomy to provinces, the amendment has created structural fiscal issues, especially within the National Finance Commission. Locking of the provincial NFC share, lack of consensus building on the NFC Award since 2009, stagnant fiscal space and tax-to-GDP ratio, vertical fiscal imbalance, and absence of a joint fiscal responsibility mechanism have a negative bearing on the macroeconomic stability of Pakistan. Limited fiscal decentralization to local governments further restricts equitable development at the grassroots level. Key recommendations include operationalizing the NFC Secretariat, revising fiscal frameworks, incentivizing provincial tax efforts, and enhancing collaboration through the Council of Common Interest to strengthen fiscal management and cohesion.
This paper explores the current state and formation mechanisms of local government debt risk in China. With the slowdown in economic growth and the reduction in land finance revenue, the scale of local government debt has expanded, and debt risks have emerged. This paper analyzes the impact of fiscal systems, regional competition, and promotion incentives on debt risk, finding that mismatched fiscal powers and responsibilities, increased fiscal decentralization, tax competition, and promotion pressures have driven debt expansion. To address these issues, the paper proposes three policy recommendations: central fiscal support to promote economic recovery, optimization of the debt structure to enhance transparency, and strict control of new debt with performance assessments. This research provides theoretical support for understanding the formation mechanisms of local government debt risk and offers references for policy formulation.
This paper investigates the distribution of public school expenditures across U.S. school districts using a bayesian maximum entropy model. Covering the period 2000-2016, I explore how inter-jurisdictional competition and household choice influence spending patterns within the public education sector, providing a novel empirical treatment of the Tiebout hypothesis within a statistical equilibrium framework. The analysis reveals that these expenditures are characterized by sharply peaked and positively skewed distributions, suggesting significant socioeconomic stratification. Employing Bayesian inference and Markov Chain Monte Carlo (MCMC) sampling, I fit these patterns into a statistical equilibrium model to elucidate the roles of competition, as well as household mobility and arbitrage in shaping the distribution of educational spending. The analysis reveals how the scale parameters associated with competition and household choice critically shape the equilibrium outcomes. The model and analysis offer a statistical basis for shaping policy measures intended to affect distributional outcomes in scenarios characterized by the decentralized provision of local public goods.
This paper examines the effect of intergovernmental fiscal transfers on the fiscal behaviour of local governments in Ethiopia for the period 2004-2018. The empirical findings suggest that central government grants bolster state-level employment and expenditure. However, grants from the central government to states do not crowd out state-level revenue collection. Hence, this paper argues that fiscal decentralisation in Ethiopia has mostly, at least in theory, taken the form of devolution of the power to tax and spend public money. However, on average state-level revenue can only finance up to 26 percent of their annual expenditure. As a result, fiscal federalism in Ethiopia appears to be a delegation of spending responsibilities. It must be considered in a decentralized tax system, but with a transfer scheme and political hierarchy. The results are robust to alternative econometric estimation techniques.
The growth of state transfers to offset disparities in regional development affects the stability of the country’s financial system. This article delves into this outcome, empirically analyzing whether the transfer system for horizontal fiscal alignment leads to decreased financial system stability through increased borrowing at municipal and national levels. To test this hypothesis, we employ a quasi-experimental analysis strategy, examining potential scenarios of configuring transfers to Ukrainian municipalities for addressing horizontal fiscal imbalance. Across various transfer calculation scenarios involving changes in the calculation period, the number of budgets in consideration, and the alignment subject, we find that a suboptimal system of horizontal fiscal alignment, transferring funds from financially secure municipalities to insecure ones, leads to a rise in the public finance debt, subsequently decreasing financial system stability. Additionally, we discover that the current mechanism in Ukraine for horizontal fiscal alignment, designed to mitigate inequalities in socio-economic development among communities and regions, paradoxically exacerbates these disparities, artificially inflates indicators of decentralization reform success, and undermines public finance stability.
This paper examines the impact of government investment by the local government to stimulate the local economy and social security expenditure to protect the poor in the local economy. Unlike government expenditure by the central government, the local government expenditure may suffer from efficiency loss due to the absence of nationwide `planning' and `coordination.' This paper, using the Korean panel data, empirically show that the government investment to stimulate the local economy incurs efficiency loss due to `coordination failure,' while the social security expenditure does not. The result requires us a cautious and precise approach to 'decentralization of public finance unlike decentralization of political power.
Abstract This chapter focuses on the diversities within the Spanish State of Autonomies, shedding light on the asymmetrical nature of the devolution process, with an emphasis on the transformation of the constitutional framework concerning tax and finance power decentralization, juxtaposing Spanish Fiscal Federalism within the broader context of the European Union. An exploration of intergovernmental tax relations uncovers the limited efficacy of mixed commissions, leading to an assessment of the Spanish Constitutional Court's central role in mediating conflict. The analysis concludes by looking forward, speculating on the potential future trajectories of Spanish fiscal federalism.
The process of fiscal decentralization, as a typical feature of contemporary societies, implies the transfer of public functions and public revenues from higher to lower levels of authorities in order to ensure the financing of the transferred functions. The trend of fiscal decentralization has created the increased need for own revenues of local self-government units. The rates of these revenues are determined by local authorities, either independently or in line with the statutory limits. In the Republic of Serbia, own revenues of local self-government unit include different local public utility fees. In this paper, the authors deal with the financial autonomy of local self-government units observed through the lens of local public utility fees, (i.e. their yields), whereby the research will be limited only to the local self-government units in the territory of Autonomous Province of Vojvodina. The authors will also attempt to determine the factors that affect the rates and abundance of these revenues of local self-government units.
Fiscal decentralization is the transfer of responsibility between the provision of public services and sources of financing by the central government to lower levels of government, with the outcome depending on how the process itself is devised and implemented. Proper and balanced implementation of fiscal decentralization leads to economic growth, achieving economic goals that can bring economic benefits. In addition to economic benefits, decentralization could lead to greater accountability, transparency, and citizen engagement, which would also improve the level of democracy in society. Since 2002, the Republic of Croatia has secured a significant amount of financial resources through the system of tax revenue sharing and aid allocation, which has significantly improved the fiscal capacity of all local units. The impact of fiscal decentralization in the Republic of Croatia on economic growth was tested using a panel analysis. From the results obtained, there is a significant positive relationship between fiscal decentralization and economic activity, and based on the results obtained, it can be concluded that fiscal decentralization in the Republic of Croatia had a positive impact on economic growth. This also confirms the role of lower levels of government established to improve the quality of life of citizens by deciding on the provision of local public services close to where they are provided and close to the users, providing better education, social and health services and infrastructure, thus positively influencing economic growth. In further research, it is necessary to focus on the creation of a better system of financing lower levels of government and on the fiscal autonomy of local units in the Republic of Croatia, in order to make the impact of fiscal decentralization on economic growth even more evident and to have as much influence as possible on the even development of the Republic of Croatia.
Abstract Local democratization aims to improve the decentralized capacity of governance regimes to generate meaningful municipal spending geared towards realizing societal outcomes. In the late 1990s, following the Asian financial crisis, Indonesia initiated a significant institutional transition from centralistic and authoritarian rule towards decentralized and more democratic governance through the introduction of direct mayoral elections. Extant research analyzed the effects of the introduction of these elections on local public spending and local societal outcomes separately. This paper offers an integrated analysis of the impact of the introduction of direct mayoral elections on both local public spending and local societal outcomes in 456 Indonesian municipalities between 2002 and 2012. Analyses of growth models, using panel data on three domains (education, health, and infrastructure) provided by Indonesian Ministry of Finance, Indonesian Ministry of Home Affairs, and Statistics Indonesia, show that the introduction of direct mayoral elections in Indonesia resulted in an increased growth in educational expenditures. It also improved outcomes in health and infrastructure domains. However, the introduction of direct mayoral elections reversed a positive association between public spending and the attainment of societal outcomes or worsened a negative association between them. These results would support a view on local democratization in Indonesia asserting that the introduction of direct mayoral elections stimulated local clientelist practices rather than local accountability and policy responsiveness.
Fiscal decentralization has recently gained popularity throughout the world. This study examines how revenue decentralization influences subnational budgetary balances and how it affects the general government debt in the OECD countries. We applied panel regression analysis to an annual panel dataset that includes data from 23 countries from 1990 to 2020. Then, we explore the relationship between fiscal/revenue autonomy and public finance debt thus budgetary balances at the SNG level. Our empirical findings suggest that higher levels of SNG budget discipline are associated with greater revenue autonomy. The findings also suggest that general governments should consider delegating greater fiscal autonomy to SNGs to achieve better fiscal outcomes, including lower levels of general government public debt. This information could be useful for policymakers who are looking to implement sustainable fiscal stewardship.
Tatiana N. Litvinova, Olga А. Kochetkova, D. V. Kaverin
Introduction. The article analyses the features of the socio-economic development of the republics of the North Caucasian Federal District in the conditions of external challenges that our country has been facing over the past three years, including the consequences of the COVID-19 pandemic, as well as external sanctions pressure in 2022. The relevance of the study is due to the constant dependence of the budgets of the republics of the North Caucasian Federal District on revenues from the federal budget, tension in the labor market, and the need to improve the mechanisms of regional governance.Materials and methods. The concept of economic (budgetary federalism) developed by J. Stigler, W. Oates, L. Feld and F. Schneider serves as the theoretical and methodological basis of the study. Foreign theories of economic federalism offer two models of the budget process – decentralized and centralized. The Russian model of budgetary federalism, functioning as a centralized unitary state, was considered in the works of A. Avetisyan, I. Kharitonov, E. Mashchenko and many others. On the one hand, such a system makes it possible to accumulate federal budget funds for solving common problems. On the other hand, there are still regions with a strong economic dependence on gratuitous receipts from the budget of a higher level. This study is based on the analysis of socio-economic statistics and monitoring of regional media.Results. The Republics of the North Caucasian Federal District continue to demonstrate a high subsidized dependence of their budgets on gratuitous receipts from the federal budget. At the same time, in the post-pandemic period, there has been a slight growth in own budget revenues due to an increase of small and medium-sized businesses. Unemployment remains a serious systemic problem. The digitalization and the development of e-government play an important role in the optimization of management processes. During the pandemic, the number of citizens of the North Caucasian Federal District receiving public services in electronic form increased by 12%. The sanctions pressure after the start of the Special Military Operation in Ukraine did not have a significant impact on the economy of the republics of the North Caucasian Federal District due to their weak involvement in the international division of labor.Discussion and conclusion. The serious dependence of the budgets of the republics of the North Caucasian Federal District on subsidies from the federal center, on the one hand, makes the socio-economic situation in the republics free from external challenges. On the other hand, the entire burden of economic support and financing of the necessary social measures falls on the federal government, in particular, smoothing out inflationary risks for small businesses and families with children. The difference in the possibilities of regional budgets was also manifested in the provision of one-time financial assistance to the families of the mobilized. This again raises the need to increase the revenue side of regional budgets, due to the growth in the number of taxpaying enterprises.
Rafał Trzeciakowski, Piotr Ciżkowicz, Andrzej Rzońca
This dataset covers 2476-2479 Polish municipalities and cities (dependent on the year) over a period from 2004 when Poland joined the EU to the pre-COVID-19-pandemic 2019. The created 113 yearly panel variables include budgetary, electoral competitiveness, and European Union funded investment drive data. While the dataset has been created out of publicly available sources, their use requires advanced knowledge of budgetary data and their classification, as well as data gathering, merging, and clearing, which required many hours of work over a year. Fiscal variables were created out of raw data of over 25 million subcentral governments records. They were sourced from Rb27s (revenue), Rb28s (expenditure), RbNDS (balance), and RbZtd (debt) forms, which are reported quarterly by all subcentral governments to the Ministry of Finance. These data were aggregated according to the governmental budgetary classification keys into ready-to-use variables. Furthermore, these data were used to create original EU-financed local investment drives proxy variables based on large investments in general and in sports objects in particular. Moreover, subcentral electoral data from 2002, 2006, 2010, 2014, and 2018 were sourced from the National Electoral Commission, mapped, cleared, merged, and used to create original electoral competitiveness variables. This dataset can be used to model different aspects of fiscal decentralization, political budget cycles, and EU-funded investment in a large sample of local government units.
Michalis Avgerinos Loutsaris, Maria Ioanna Maratsi, Zoi Lachana, Mohsan Ali
Eight basic principles are described in the literature (Höchtl and Reichstädter, 2011; Solar et al., 2013), which should meet government data in order to be considered open. These are: (1) Complete; (2) Primary; (3) Timely; (4) Accessible; (5) Machine processable; (6) Non-discriminatory; (7) Non-proprietary; (8) License-free. In parallel, Government data may contain multiple sets of data, including transactions in any form (e.g. financial or not) and expenditure, population, census, parliamentary proceedings, etc. According to Ubaldi (2013) public data sets included in open government data initiatives include:<br> 1.business information (including chamber of commerce information, etc.)<br> 2.registries, patent and trademark information and public databases<br> 3.geographic information (such as address information, aerial photographs, buildings, geology, and topographic information)<br> 4.legal information (such as national, and international court decisions, national laws)<br> 5.meteorological information (including data and models for climate and weather forecasts)<br> 6.social data (such as statistics on the economy, employment, health, population etc.).<br> 7.Transport information (such as traffic congestion, public transport and vehicle classification);<br> At the same time, the characteristics of NFTs (as it is mentioned above) along with their usage advantages (ownership, authenticity, transferability, creation of economic opportunity, and boosting inclusive growth), constitute them as an innovative solution for governments. The adoption of NFTs solutions by the public sector will not only provide many new capabilities and better services but will establish a safest, openly accessible, transparent and eco-friendly transactional environment. In addition the most important disadvantage of the NFTs usage which is the Concerns Regarding Ecological Impact, seems that fades due to the Proof-of-Stake consensus mechanisms which is proven to be energy efficiency.
Rafael Berriel, Eugenia Gonzalez-Aguado, Patrick J. Kehoe, Elena Pastorino
We apply ideas from fiscal federalism to reassess how fiscal authority should be delegated within a monetary union.In a real-economy model with no fiscal externalities, in which local fiscal authorities have an informational advantage about the preferences of their citizens for public spending relative to a fiscal union, a natural generalization of the classic decentralization result by Oates (1972) applies.Namely, a decentralized fiscal regime dominates a fiscal union, and the degree of dominance increases as the information of the fiscal union worsens in quality.In the presence of direct fiscal externalities across countries, however, a decentralized regime is optimal for small federations of countries, whereas a centralized regime is optimal for large ones.We then consider a monetary-economy model, in which governments finance their expenditures with nominal debt and inflation has a negative impact on aggregate productivity.If the monetary authority can commit to an inflation policy, then a version of Oates (1972)'s decentralization result holds.By contrast, when the monetary authority lacks commitment power, the resulting time-inconsistency problem generates an indirect endogenous fiscal externality.In this case, when a country-level fiscal authority chooses a higher level of nominal debt, it induces the monetary authority to inflate more to reduce the level of distortionary taxes needed to finance the higher debt.Because country-level fiscal authorities do not take into account the costs to other countries of the inflation that their fiscal policies induce, a negative fiscal externality arises.This externality naturally becomes more severe as the number of countries in the monetary union increases.Hence, as in the real-economy model, a decentralized fiscal regime is optimal for small monetary unions, whereas a fiscal union is optimal for sufficiently large ones.Our key result is that as the size of a monetary union increases, it becomes relatively more desirable to centralize fiscal authority.We conclude by discussing the implications of our results for the debate on the integration of fiscal policy within the EU and its enlargement.