Federal Transfers Research Articles

Development of the Social Environment and Economic Activity in the Subjects of the Russian Federation

Russian scientific publications regularly publish materials, the authors of which explore the differences in the levels of socio-economic development of Russian regions. The problem is considered in various aspects, including from the point of view of determining the ability of regional economies to meet the needs of the population living within the borders of the subjects of the Russian Federation. The article presents the results of the rating of the subjects of the Russian Federation for 2019–2023 on the basis of the author’s methodology. With minor changes to the methodology, she continues a series of previously published papers. It is shown that during 2019–2023, for most subjects of the Russian Federation, there was an unstable trend in all three key components of the final index (social, economic, budgetary). There is no pronounced connection between the dynamics of the indicator of the Social Block and the degree of economic activity in the region. The vast majority of regions as a whole successfully overcame the crisis recessions of 2020 and 2022, but in 19 subjects of the Russian Federation the precarious values of the final index were not exceeded in 2023. The drop in the indices of the Social Block in 2020 was less significant than after the start of the support for the social sphere during the pandemic. In 2023, for most subjects of the Russian Federation, there was an upward trend in the Final Index and overcoming the recession associated with sanctions pressure. The response of the regions to this crisis varied, which was reflected in the different dynamics of all three components of the final index (Social, Economic and Budgetary blocks). A pronounced and growing dependence of the dynamics of the Social Block on federal transfers is shown both for regions with a downward trend in the index of the Economic block and for regions with an increase in economic activity.

Agenda of Federal System in Nepal: Nexus of Fiscal Federalism and Controlled Corruption

This research critically assesses Nepal's fiscal federalism, focusing on the interconnectedness of budget allocation, spending, revenue generation, and corruption at the provincial level. Using a mixed-methods approach, the study combines quantitative data analysis with qualitative insights to evaluate how weaknesses in fiscal management erode public trust in federalism. The findings show that while decentralizing power and resources is a core objective of the federal system, provincial governments remain heavily dependent on federal transfers due to limited internal revenue generation. The study reveals that provinces fall short of meeting public expectations, primarily due to insufficient and poorly managed expenditure capacities, resulting in substantial underperformance. Additionally, the research identifies a significant correlation between increased budget allocation and corruption, highlighting that higher public spending often leads to financial misconduct. This is reflected in unspent budgets and frequent misuse of public funds, which amplify public dissatisfaction with the federal system. The study emphasizes the need for improved fiscal autonomy, stronger accountability frameworks, and more effective resource-sharing mechanisms to enhance the efficiency of provincial governments and address rising concerns about the viability of federalism.

Untangling the Gordian Knot: Regulating Federal Transfers in Canada

Conditional transfers comprise the majority of transfers received by the provinces from the federal government in Canada. The conditions attached to such transfers can afford the federal government a role in provincial matters, but there are no clear guidelines on when conditional transfers are ultra vires the federal government. This article explores the constitutionality of conditional transfers, beginning with an exploration of their past and present role in Canadian intergovernmental relations. It discusses the potential for conditional transfers to enhance federalism, and assesses the shortcomings of the current Canadian approach in facilitating intergovernmental collaboration. Finally, this article explores how courts can increase the compatibility of conditional transfers with federalism by ensuring the transfers are voluntary, consensual, unambiguous, binding, and reasonable.

Federal transfers to municipalities through parliamentary amendments: implications for SUS funding.

The present article analyzes the transfers from parliamentary amendments by the Ministry of Health to municipalities to finance public health actions and services from 2015 to 2021. A descriptive and exploratory study was carried out with secondary data, including all Brazilian cities. Resources from amendments showed an increase, particularly from 2018 onwards, indicating the expansion of their relevance for financing SUS. From 2016 to 2021, over 80% was allocated to municipalities, representing 9.5% of all federal transfers, with 91.2% for operational expenses. Transfers from amendments differ from regular transfers due to greater instability and per capita variation among the amounts collected by municipalities and due to the fact that they allocate most resources to the Northeast and primary care to the detriment of the Southeast and medium and high complexity care. These transfers represent a differentiated modality of resource allocation in SUS that produces new distortions and asymmetries, with implications for intergovernmental relations, as well as between the executive and legislative powers, increasing the risk of the discontinuity of actions and services and imposing challenges for the municipal management.

Voluntary federal transfers and resource application: a systematic literature review

Voluntary federal transfers and resource application: a systematic literature review

Results of 2023 for Regional Budgets. Is the Restructuring of the Economy Visible?

The generally favorable situation with the implementation of the consolidated budgets of the subjects of the Russian Federation in 2023 is a result of the positive dynamics of key macroeconomic indicators, expressed in an increase in tax revenues of budgets. In the context of generally high growth rates of tax revenues, the federal transfers showed a slight nominal increase. In most regions, there has been a reduction in federal transfer recеipts, which may indirectly indicate an emerging revision of the existing model of inter-budgetary relations. There is a certain dependence of the dynamics of transfers on the dynamics of tax revenues and the availability of funds (last year’s surpluses) in the budget accounts of the subjects of the Russian Federation. The structure of tax revenues by type of economic activity has not yet shown significant changes. There is a pronounced decrease in the share of wholesale and retail trade, against the background of an increase in the share of the financial sector and extractive activities. Expenditures of regional budgets in 2 023 grew more actively than revenues, which led to the formation of a deficit in the consolidated budgets of the subjects of the Russian Federation. The differing growth rates of budget expenditures have the consequence of the continued concentration of regional-level expenditures in a relatively narrow group of the most powerful regions in terms of economic potential. The increase in the volume of accumulated state subfederal debt occurs in conditions of active substitution of market forms of debt obligations with loans from the Ministry of Finance of the Russian Federation.

Effects of parliamentary amendments on municipal financing of primary health care in the Brazilian Unified National Health System

This study aims to analyze the effects of the expansion of the federal transfer of parliamentary amendments for municipal financing of primary health care (PHC) in the Brazilian Unified National Health System (SUS), from 2015 to 2020. A longitudinal study was conducted using secondary data on transfers of parliamentary amendments from the Brazilian Ministry of Health and expenditure of municipalities' own resources on public health actions and services and PHC. The effect of the transfer of parliamentary amendments on municipal financing was verified in a stratified way by population size of the municipalities, using generalized estimating equation models. The transfer of parliamentary amendments for PHC showed a large discrepancy in per capita values among municipalities of different population sizes. No correlation with municipal spending on public health actions and services was observed in municipalities with more than 10,000 inhabitants, and the association with spending on PHC (p < 0.050) was inverse in all municipalities. Therefore, the increase in the transfer of parliamentary amendments by the Brazilian Ministry of Health favored a reduction in the allocation of municipal revenues to PHC, which may have been directed to other spending purposes in the SUS. These changes seem to represent priorities established for municipal budget expenditure, which have repercussions on local conditions for guaranteeing stable funding for PHC in Brazil.

Consolidated Budgets of the Subjects of the Russian Federation in the First Half of 2023. Budget Risks are Increasing

The performance of the consolidated budgets of the subjects of the Russian Federation in the first half of this year was characterized by real growth rates of income taxreceipts and only nominal growth personal income tax receipts.The increase in federal transfer receipts was partly determined by the financing of the budgets of the new regions of the Russian Federation. In addition to the growth of economic activity, the dynamics of own revenues of regional budgets in the first half of the year was influenced by factors such as the cancellation of income tax payments within consolidated groups of taxpayers and the accelerated procedure for personal income tax reimbursement.The growth of expenditures of regional budgets lagged behind the growth of revenues, but significantly outpaced last year’s figures, which resulted in a reduction in the surplus of subfederal budgets compared to the previous year. The trend towards an increase in the volume of state and municipal debt has continued against the background of an increase in debt to the Ministry of Finance of the Russian Federation. The growth of public debt is taking place both in relatively prosperous regions and in problematic ones. The reduction in the volume of debt obligations by individual subjects of the Russian Federation cannot yet change the overall picture. The approved law on the federal budget for 2024 and subsequent years assumes a reduction in federal support for regional budgets against the background of an increase in spending needs and contains significant risks for the execution of sub-federal budgets.

Equalizing federal transfers to Brazilian municipalities: old problems and new proposals based on the experiences of fiscal equalization programs in OECD countries and results-based fiscal transfers in the State of Ceará

Resumo Instituídos pelo governo militar e mantidos essencialmente intactos pelos governos civis subsequentes, os critérios de distribuição do Fundo de Participação dos Municípios são claramente anacrônicos e injustificáveis. O texto propõe novos critérios a partir da experiência dos programas de equalização fiscal em países da OCDE e da experiência do estado do Ceará com a distribuição do ICMS.

Revenue Decentralization and the Probability of a Fiscal Crisis: Is There a Tipping Point for Adverse Effects?

Does government revenue decentralization affect the probability of a fiscal crisis? Is there a tipping point where revenue decentralization worsens the probability of a fiscal crisis? To answer these questions, we use cross-country panel data on 66 countries from 1982 to 2019. The binary choice models show that revenue decentralization is positively associated with crisis probability when countries exceed a certain threshold of decentralization. When more than approximately 16 percent of general government revenue is decentralized to local governments, this adverse effect of revenue decentralization occurs. This is consistent with the recent theoretical prediction that tax revenue collection efforts weaken as the government decentralizes revenue more. The adverse effects of revenue decentralization are large in low-income countries. Our finding implies the benefits of revenue centralization, such as economies of scale for revenue agencies, eliminating externalities due to tax competition, and the intergovernmental insurance role of federal transfers against local shocks.

Towards equitable healthcare provision: convergence of public health spending and the role of decentralization in Malaysia

This paper investigates the behavior of public health spending across different states in Malaysia, focusing on the convergence of per capita spending and the impact of decentralization on health expenditure disparities. Despite slight variations in life expectancy at birth, Malaysia can highlight its efforts to lessen dispersion in infant mortality, crude death rates, and crude birth rates among its states. The findings reveal a convergence in spending among states was observed from 2005 to 2019, with conditional models displaying faster convergence. The results highlight that factors beyond initial spending significantly influence health expenditure growth across states. State revenue positively impacts healthcare expenditures’ growth rate, while the impact of per capita federal transfers remains insignificant. The state’s fiscal capacity, the initial gross domestic product, and population growth significantly impact healthcare expenditure. The study suggests that a fair distribution of healthcare spending across states contributes to spatial equity in healthcare service provision.

Unconditional federal transfers and state government spending: The flypaper effect in Nigeria and South Africa

The flypaper effect is undoubtedly among the most interesting concepts in subnational government spending behavior. This study is the first attempt to provide empirical evidence on the existence of the flypaper effect in the two largest economies in Sub-Saharan Africa: Nigeria and South Africa. Using the two-step system generalized method of moment’s estimator, our results show that the flypaper effect exists for both state and provincial governments in Nigeria and South Africa. Provincial governments in South Africa are found to be more responsive to positive changes in unconditional federal transfers than state governments in Nigeria. We therefore recommend sen­sitization on the receipt and disbursement of unconditional federal transfers. This will help reduce the illusion or information asymmetry about the use of unconditional federal transfers.

An analysis of asymmetric effect of federal transfers across Indian states

This study empirically examines the asymmetric effect of federal transfers in India using a panel dataset of 18 states from 2000–2001 to 2019–2020. In mapping the asymmetric effect of federal transfers on subnational spending across the Indian states, we test it in the extended ‘flypaper effect’ framework, examining whether subnational expenditures respond in the same way to changes in federal transfers. To quantify the extent of the asymmetric effect on the subnational expenditure, we employed the panel non‐linear ARDL model. The results suggest that subnational spending has a greater asymmetric response to the increase in federal transfers than to a decrease. At the disaggregate level, ten out of 18 states have a fiscal replacement kind of asymmetric effect in any spending specifications. But only three validate it in the capital and development spending, and seven states validating in the non‐development expenditure on the revenue accounts. Replacing the cut in federal transfers with other revenue sources that prioritise non‐development spending over development spending is problematic.

Intergovernmental Fiscal Transfers and Tax Collection of Indian States: Estimation from Panel Data Models

Abstract This study tries to empirically estimate the effects of the composition of intergovernmental transfers on tax collection across the Indian states by using panel regression model. As intergovernmental transfers constitute almost 47 per cent in total revenue of the states, it could play a vital role in states’ own tax collection. The impact of different channels of federal transfers on tax capacities is examined among 25 Indian states over the period from 1991-92 to 2017-18. The study also attempted to capture the asymmetric effect of various forms of transfers, but findings reveal that only state plan grant has a significant effect on its own tax collection. The empirical evidence suggests that the composition of intergovernmental transfers has a dampening effect on states’ own tax revenue. Apart from transfers’ variables, the study incorporates socio-economic and certain political variables to estimate states’ own tax collections.

The First Quarter of 2023 for the Consolidated Budgetsof the Subjects of the Russian Federation: Emerging Trends and New Conditions

At the beginning of the year, the consolidated budgets of the subjects of the Russian Federation were executed in conditions of continued sanctions pressure on the regional economy. Organizational and administrative innovations had a significant impact on the process of budget revenue formation (enactment of payment of taxes using a single tax account, cancellation of income tax payment within consolidated groups of taxpayers, introduction of an accelerated procedure for reimbursement of personal income tax). The growth of regional budget revenues in real terms was provided by federal transfers. Tax revenues grew only nominally. The increase in corporate income tax receipts did not compensate for the reduction in personal income tax receipts. Expenditures of regional budgets grew at a higher rate than revenues, which led to a reduction in the total amount of the positive balance of the consolidated budgets of the subjects of the Russian Federation in most regions. The trend towards an increase in the volume of state and municipal debt has continued with an outstripping growth in the volume of budget loans. There is a substitution of market forms of borrowing for budgetary ones as compensation for the existing inefficient model of distribution of tax powers.

The Fiscal Consequences of Natural Disasters: Evidence from the U.S. States

The paper investigates the fiscal impact of natural disasters in the U.S. states. The focus is on state spending, state revenues, and federal transfers for the period from 1970 to 2015. Results show that a broad definition based on dollar damages from all emergency events and major disasters has a small effect on state-level fiscal conditions, which stands in contrast to prior studies. On the other hand, a narrower definition based on the occurrence of major disasters is associated with increased spending and transfers alongside spending effects that grow with disaster severity.

Health care expenditure and income in Canada: Evidence from panel data.

This paper investigates the long-run relationship between health care expenditures (HCE) and income using Canadian provincial data spanning a period of 40years from 1981 to 2020. We study the non-stationary and cointegration properties of HCE and income and estimate the long-run income elasticities of HCE. Using heterogeneous panel models that incorporate cross-section dependence via unobserved common correlated factors to capture global shocks, we estimate long-run income elasticities that lie in the 0.11-0.16 range. Our results indicate that health care is a necessity good for Canada. These elasticity estimates are much smaller than those estimated in other studies for Canada. We find that HCE and income in Canada are cointegrated and that short-run changes in federal transfers significantly and positively affect HCE.

Universities, imperialism and the collective work ahead.

Universities, imperialism and the collective work ahead.

Federal transfers: Leeway to higher regional debt?

The research focuses on the impact of substituting own revenues in Russian regions by federal intergovernmental transfers on the amount of public debt using the concept of vertical fiscal imbalance (VFI). Vertical imbalance emerges as a result of spending assignment exceeding revenue streams at the lower levels of the budgetary system. It leads to a lack of own revenues and creates risks of accumulating deficits and debt buildup. Vertical imbalance is analyzed as a whole and by its components — the deficit of a subject of the Russian Federation and the types of intergovernmental transfers. Shared revenue sources with sharing rates differentiating among regions and allotted at the discretion of regional authorities to local administrations are considered to be regional intergovernmental transfers as well. Quantitative analysis was carried out by panel regression with fixed effects of regions and observation periods based on the data for 2011—2020. It is found that vertical imbalance does not have a significant impact on the amount of debt, as federal intergovernmental transfers do not restrain growth of tax base or efficiency of spending, as laid out by the theory. We refer the low risk of negative consequences to the low powers of regions in generating revenues and big primary spending obligations.

Poverty Reduction through Federal and State Policy Mechanisms: Variation over Time and across the United States

The efficacy of the US antipoverty policy is shaped both by its reliance on categorical sorting and by its decentralized structure. To examine the implications of these features, this study introduces a novel disaggregation of poverty reduction instruments into four mechanisms: federal taxes and federal transfers (centralized) and state taxes and state transfers (decentralized). Using the Current Population Survey’s Annual Social and Economic Supplement data and a sequence-independent decomposition, this analysis assesses the relative effectiveness of the mechanisms at the national level between 1996 and 2016 and across the states in 2016. The study finds that absolute and relative poverty reduction is greater and has increased over time for working-age households with children compared with those without children. We also find cross-state variation in market- and disposable-income poverty and in the poverty reduction attributable to each of the redistributive mechanisms, highlighting the importance of examining poverty and antipoverty policy subnationally.