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FISCAL DECENTRALIZATION DETERMINANTS: ANALYSIS OF THE EU COUNTRIES´ CLUSTERED SAMPLE IN PERIOD 1995-2015


Finance

FISCAL DECENTRALIZATION DETERMINANTS: ANALYSIS OF THE EU COUNTRIES´ CLUSTERED SAMPLE IN PERIOD 1995-2015

Name and surname of author:

Lenka Maličká, Slavomíra Martinková

Year:
2018
Volume:
21
Issue:
2
Keywords:
Public sector, fiscal federalism, fiscal decentralization, cluster analysis, panel data
DOI (& full text):
Anotation:
Fiscal decentralization as a shift of decision-making powers from the central level of government to lower government levels is an object of wide research. In this field there is a discussion ranging from the eligibility of fiscal decentralization, its advantages and threats, to searching for the fiscal decentralization´s impact on certain macroeconomic indicators. Research focusing on investigating for fiscal decentralization determinants has not clear answer to this question. It considers various indicators often with their ambiguous impact on fiscal decentralization. In this paper, the problem of fiscal decentralization determinants is investigated on the EU countries sample in period 1995- 2015. EU countries are divided into groups according to their fiscal decentralization average degree using the cluster analysis. Fiscal decentralization different measures refer on the expenditure, revenue, tax and grant decentralization. For each cluster a panel model is estimated to reveal an influence of selected variables on fiscal decentralization, while fiscal decentralization as dependent variable is measured by chosen various measure. Sensitivity of the estimation results on the fiscal decentralization measurement is obvious. Obtained results partially support assumptions given on basics of related literature. Significant appearance of the economy openness variable, GDP per capita growth and inflation rate, public and local debt variable and variable based on dependency ratio, and population density is influenced by construction of the fiscal decentralization indicator. It might explain the disunited character of observed FEM and REM results, additionally the turn of coefficient sign comparing fiscal decentralization measures postulates certain common tendencies revealing the fiscal decentralization character and conditions.
Fiscal decentralization as a shift of decision-making powers from the central level of government
to lower government levels is an object of wide research. In this field there is a discussion ranging
from the eligibility of fiscal decentralization, its advantages and threats, to searching for the fiscal
decentralization´s impact on certain macroeconomic indicators. Research focusing on investigating
for fiscal decentralization determinants has not clear answer to this question. It considers various
indicators often with their ambiguous impact on fiscal decentralization. In this paper, the problem
of fiscal decentralization determinants is investigated on the EU countries sample in period 1995-
2015. EU countries are divided into groups according to their fiscal decentralization average degree
using the cluster analysis. Fiscal decentralization different measures refer on the expenditure,
revenue, tax and grant decentralization. For each cluster a panel model is estimated to reveal an
influence of selected variables on fiscal decentralization, while fiscal decentralization as dependent
variable is measured by chosen various measure. Sensitivity of the estimation results on the fiscal
decentralization measurement is obvious. Obtained results partially support assumptions given on
basics of related literature. Significant appearance of the economy openness variable, GDP per
capita growth and inflation rate, public and local debt variable and variable based on dependency
ratio, and population density is influenced by construction of the fiscal decentralization indicator.
It might explain the disunited character of observed FEM and REM results, additionally the turn of
coefficient sign comparing fiscal decentralization measures postulates certain common tendencies
revealing the fiscal decentralization character and conditions.
Section:
Finance

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