Analysis of the dynamic relationship between income and expenditure of the Moscow budget (2013:01÷2023:03): Time-frequency approach

Abstract

The article conducts a study of the sustainability of the Moscow city budget, based on an analysis of the time-frequency relationship between its monthly expenses and income, for the period from December 2012 to March 2023, using the calculated values of wavelet coherence and the phase difference between the wavelets of expenses and income. Four main concepts concerning the correlation between government expenditures and income, including tax revenues, are considered — these are the hypotheses: “income-expenses”; “expenses-income”; fiscal synchronization and the institutional separation hypothesis. The results of the study show that in the case of the Moscow city budget, all four dynamic relationships between its income and expenses are observed, in different time periods, on different time scales, over the observation time interval (2013:01?2023:03), proposed by the theory. Assessing the dynamic relationship between income and expenditure of the budgets of the constituent entities of the Russian Federation is important for the development of fiscal policy aimed at increasing the sustainability of the budgets of the constituent entities of the Russian Federation.