Elasticity Assessment For Grants Targeting Fiscal Equalization In The Far East Regions


The development opportunities of the RF Far Eastern regions are often restricted by relatively low fiscal capacities of regional budgets. The low potential incomes make transfers from the federal budget a key funding source for the Far East regions. The most important transfer is the fiscal equalization grant for the regions of Russia, which increases budget revenue without any restrictions for expenditure items. The distribution of equalization grants is based on a complex system of parameters with the one characterizing the features and conditions of regional development and reflecting the budget expense appreciation factors. The Far East regions have a high cost of budget expenses due to the low population density, weak connections between settlements, high prices for products and services, the seasonal nature of many transport channels, and other factors. Due to this, the Far Eastern regions produce numerous suggestions to adjust the distribution methods for equalization grants to better reflect their specifics. However, it was impossible to assess the impact of possible grant distribution method adjustments (effect per grant amount) when preparing and rationalizing the suggestions.To perform a pre-assessment of the impact of grant distribution method adjustment, a model was constructed reproducing the distribution of grants based on the methods used. For each of the regions of the Far East, we obtained grant amount elasticity assessments changing the parameters involved in the calculations. The model application helps assess the effects of method adjustments while preparing suggestions rationalizing interactions between regions and federal authorities on fiscal equalization.

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21 June 2021

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Social sciences, education and psychology, technology and education, economics and law, interdisciplinary sciences

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Veprikova, E. B., & Novitskii, A. A. (2021). Elasticity Assessment For Grants Targeting Fiscal Equalization In The Far East Regions. In N. G. Bogachenko (Ed.), Amurcon 2020: International Scientific Conference, vol 111. European Proceedings of Social and Behavioural Sciences (pp. 1108-1114). European Publisher. https://doi.org/10.15405/epsbs.2021.06.03.147