Paradoxes of the Anti-crisis Role of Fiscal Federalism: Analytical Review of Studies

• Published in: Financial Journal Vol. 16; no. 3; pp. 86 - 97
• Main Authors: Kireyeva, A.F., Rudy, K.V.
• Format: Journal Article
• Language: English
• Published: Financial Research Institute 01.06.2024
• Subjects: conflicts; economic crises; fiscal federalism; pandemic; public finance; sustainable development
• ISSN: 2075-1990; 2658-5332
• DOI: 10.31107/2075-1990-2024-3-86-97

The analytical review of studies of the anti-crisis role of fiscal federalism during economic, ecological, epidemic challenges and territorial conflicts in 1950–2024 reveals four paradoxes. The first of them indicates the scientific validity of the positive anti-crisis effect of fiscal decentralization. But when crises arise in practice, decentralization turns out to be unclaimed, and preference is given to centralization. The second paradox is related to the nonlinear positive effect of fiscal decentralization on economic growth, natural resources consumption, and carbon emissions. For example, the nonlinear positive effect of decentralization is achieved when the institutional context is improved. The third paradox is the relatively weak methodological elaboration of fiscal federalism during pandemic challenges, although it had the greatest practical relevance compared to more in-depth econometric studies of economic and environmental challenges. The fourth paradox is that fiscal federalism can both resolve the territorial conflict and create the preconditions for its resumption in the future. The peacemaking conditions of fiscal federalism are transparency and stability of inter-budget transfers, as well as insured access of the conflict region to its natural resources.