Modelling the Influence of Factors on the Formation of Local Budget Income

Abstract

Abstract One of the important tasks of the functioning of the financial system and democratic society is the effective management of budgetary resources of local self-government bodies. Which, in turn, depends on the amount of budget resources available to local authorities. The main sources of the formation of financial resources are tax and nontax revenues, income from capital transactions and official transfers. In this article, an objective quantitative analysis of the influence of factors on the formation of local budget revenues is carried out using economic and mathematical modeling on the example of local budgets of the Volyn region. To build a model of dependence the volume of local budget revenues and the constituents of revenue receipts, the method of principal components was used, which made it possible to replace correlated factors with uncorrelated components. Based on the formed model, it is proposed to forecast income indicators for future periods. Modeling positive and negative scenarios for the formation of the community’s budgetary resources will enable for local self-government bodies to develop, accordingly, plans for the development of the territory, to optimize the sources of income and directions for the use of budgetary resources, and also to implement measures to smooth out negative impacts.