Issues in intergovernmental fiscal relations : possible lessons for Economies in Transition

Abstract

This paper surveys theoretical literature on fiscal federalism, noting several concepts useful in understanding features typical to countries in transition.We argue that some of the concepts of standard fiscal federalism do not apply to transition economics as they do elsewhere.For example, normally undesirable inter-regional competition may actually benefit the transition process by forcing regions to alter their patterns of public spending.We further suggest that practices such as in-kind transfers may carry additional benefits in a transition environment.The paper makes extensive use of observations from Russia's system of inter-governmental relations. Keywords: fiscal federalism, transitional countries, Russia