Measurements of Fiscal Imbalances in Romania
Keywords:vertical fiscal imbalance; horizontal fiscal imbalance; fiscal gap; subnational government inequalities; transfers
Subnational government inequalities are always a challenge for the countries all over the world, in particular large ones, even are unitary states or federations. Romania has a unitary system, but decentralization process and different level of economic development of individual territorial units determine specific problems resulting in fiscal gaps, both horizontal and vertical. The paper focuses in the first part on the review of the literature regarding the measurement of the vertical and horizontal fiscal imbalances, and the second part will measure fiscal imbalances in Romania counties based on methodologies identified in the first part. Despite being a unitary country, Romania presents an increasing of horizontal fiscal imbalance and high vertical fiscal imbalances for 28 counties of 42. The paper can be considered a useful viewpoint in understanding the state of fiscal imbalances in Romania.
Aldasoro, I. & Seiferling, M. (2014). Vertical Fiscal Imbalances and the Accumulation of Government Debt. IMF Working Paper WP/14/209. Bird, M. R. & Tarasov V. A. (2004). Closing the gap: fiscal imbalances and intergovernmental transfers in developed federations. Environment and Planning C: Government and Policy, 22, pp. 77 – 102. Bird, R. M., & Tarasov, A. V. (2002). Closing the gap: fiscal imbalances and intergovernmental transfers in developed federations. WP 02/02. International Studies Program. Andrew Young School of Policy Studies. Georgia State University, Atlanta, GA. Bird, R. M. (1993). Threading the fiscal labyrinth: some issues in fiscal decentralization. National Tax Journal 46, pp. 207 – 227.
Cowell, F. A. (2011). Measuring inequality, 3rd ed. LSE Perspectives in Economic Analysis. Oxford University Press. New York. Hunter, J. S. H. (1974). Vertical intergovernmental financial imbalance: a framework for evaluation. Finanzarchiv 2, pp. 481 – 492/ Hunter, J. S. H. (1977). Federalism and Fiscal Balance. Australian National University Centre for Research on Federal Financial Relations, Canberra. Kowalik, P. (2016). Measurement of vertical fiscal imbalance in Germany. Argumenta Oeconomica, 2(37), pp. 131-146. Kowalik, P. (2015). Horizontal fiscal imbalance in Germany. Business and Economic Horizons, 11(1), pp.1-13. DOI. http://dx.doi.org/10.15208/beh.2015.01. Li S. & Xu Z. (2008). The trend of regional income disparity in the People’s Republic of China. ADB Institute Discussion Paper No.85. Tokyo. Martinez-Vazquez, J. & Boex, J. (February 2001). Russia’s Transition to a New Federalism. The World Bank. Washington, D.C. Martinez-Vazquez, J.; Boex, J. (1999). The Design of Equalization Grants: Theory and Applications. Part One: Theory and Concepts. World Bank Institute. Andrew Young School of Policy Studies. Georgia State University. Washington, D.C. Shankar R. & Shah A. (2001). Bridging the economic divide within nations: a scorecard on the performance of regional policies in reducing regional income disparities. Policy Research Paper 2717. World Bank. Washington, DC. Schroeder, L. & Smoke, P. (2003). Intergovernmental Fiscal Transfers: Concepts, International Practice and Policy Issues. Kim Y.-H., Smoke, P. (eds.). Intergovernmental Fiscal Transfers in Asia: Current Practice and Challenges for the Future, pp. 20–59. Asian Development Bank, Mandaluyong City.
Copyright (c) 2021 Elena Cigu
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
You are free to:
- Share — copy and redistribute the material in any medium or format
- Adapt — remix, transform, and build upon the material
- for any purpose, even commercially.
- The licensor cannot revoke these freedoms as long as you follow the license terms.
Under the following terms:
- No additional restrictions — You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.