Intra-regional Equalization and Growth in Russia
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Throughout the 1999–2008 growth streak, the dynamics of the economic recovery have been very uneven across Russian regions. Therefore, the determinants of regional economic growth are likely to have a strong sub-national level component. In this paper we examine the potential role played by the fiscal equalization performed by regional governments among their constituent localities. Our empirical results strongly suggest that intra-regional fiscal equalization has a substantial impact on regional growth. Specifically, we find the following policy tradeoff: one standard deviation higher level of intra-regional equalization translates into between 0.18 and 0.45 of a standard deviation lower rate of regional growth.
KeywordsRussia equalization grants growth
JEL ClassificationsH73 H77 P25 P35
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