Generate QR code
Open Access
Subscription Access
Determinants of public spending composition in the Russian regions
https://doi.org/10.32609/0042-8736-2024-1-5-32
Abstract
We build factor models of the regional budgets spending composition, based on data for 2011—2019. Our estimates reveal that expenditure on social security, public health, and education have relatively low elasticity by fiscal revenue (0.6—0.7), On the contrary, national economy and housing expenditure have the highest elasticity (1.3—1.7), while culture and general public services expenditure are characterized with medium elasticity (0.8—0.9). The major econometric tool used for the analysis is quantile regression that allows to detect heterogeneity of expenditure relations with various factors. The dependence of fiscal revenues is homogenous only for social security, public health, and housing, while for other types of expenditure this relationship differs between regions with high and low fiscal revenue. We suggest procedure to identify individual ‘spending preferences’ of particular regions and classify all regions depending on their top spending priorities. Regions with a larger value of the gross regional product most often have education and social security as their priority while other regions mainly have national economy spending as a priority.
Keywords
Russia’s regional budgets,
public spending composition,
regional differentiation,
regional clustering,
quantile regression
JEL: H72, H75, H76
About the Authors
E. T. Gurvich
Economic Expert Group; Financial Research Institute
Russian Federation
Russian Federation
Moscow
N. A. Krasnopeeva
Center for Strategic Research
Russian Federation
Russian Federation
Moscow
References
1. Балаев А. (2018). Влияние структуры бюджетных расходов на экономический рост в России // Экономическая политика. Т. 13, № 6. С. 8—35. [Balaev A. (2018). The impact of public expenditure structure on economic growth in Russia. Ekonomicheskaya Politika, Vol. 13, No. 6, pp. 8—35. (In Russian).] https://doi.org/10.18288/1994-5124-2018-6-8-35
2. Зубаревич Н. В., Сафронов С. Г. (2023). Налогово-бюджетная дифференциация регионов России: масштабы и динамика // Региональные исследования. № 1. C. 31—41. [Zubarevich N. V., Safronov S. G. (2023). Regional inequality and its changes: Budget projection. Regionalnye Issledovaniya, No. 1, pp. 31—41. (In Russian).] https://doi.org/10.5922/1994-5280-2023-1-3
3. Иванова Н., Каменских М. (2011). Эффективность государственных расходовв России // Экономическая политика. № 1. С. 176—192. [Ivanova N., Kamenskikh M. (2011). Budget expenditures effectiveness in Russia. Ekonomicheskaya Politika, No. 1, pp. 176—192. (In Russian).]
4. Лавров А. М. (2019). Логика и перспективы бюджетных реформ в России: в поисках« оптимальной децентрализации». М.: Изд. дом ВШЭ. [Lavrov A. M. (2019). Logic and prospects of fiscal reforms in Russia: In search of ‘optimal decentralization’. Moscow: HSE Publ. (In Russian).]
5. Alegre J. (2010). Decentralization and the composition of public expenditure in Spain. Regional Studies, Vol. 44, No. 8, pp. 1067—1083. https://doi.org/10.1080/00343400903365151
6. Barro R. (1990). Government spending in a simple model of endogenous growth. Journal of Political Economy, Vol. 98, No. 5, pp. 103—124. https://doi.org/10.1086/261726
7. Barro R., Sala-i-Martin X. (1992). Public finance in models of economic growth. Review of Economic Studies, Vol. 59, No. 4, pp. 645—661. https://doi.org/10.2307/2297991
8. Behera D. K., Dash U. (2018). Examining the state level heterogeneity of public health expenditure in India: An empirical evidence from panel data. International Journal of Healthcare Technology and Management, Vol. 17, No. 1, pp. 75—95. https://doi.org/10.1504/IJHTM.2018.091851
9. Besstremyannaya G., Dasher R., Golovan S. (2022). Quantifying heterogeneity in the relationship between R&D intensity and growth at innovative Japanese firms: A quantile regression approach. Applied Econometrics, Vol. 67, pp. 27—45. https://doi.org/10.22394/1993-7601-2022-67-27-45
10. Besstremyannaya G., Golovan S. (2021). Measuring heterogeneity with fixed effect quantile regression: Long panels and short panels. Applied Econometrics, Vol. 64, pp. 70—82. https://doi.org/10.22394/1993-7601-2021-64-70-82
11. Blöchliger H., Kantorowicz J. (2015). Fiscal constitutions: An empirical assessment. OECD Economics Department Working Papers, No. 1248.
12. Chernozhukov V. (2005). Extremal quantile regression. Annals of Statistics, Vol. 33, No. 2, pp. 806—839. https://doi.org/10.1214/009053604000001165
13. Chen B. (2006). Economic growth with an optimal public spending composition. Oxford Economic Papers, Vol. 58, No. 1, pp. 123—136. https://doi.org/10.1093/oep/gpi045
14. Cordis A. (2014). Corruption and the composition of public spending in the United States. Public Finance Review, Vol. 42, No. 6, pp. 745—773. https://doi.org/10.1177/1091142114531320
15. Delavallade C. (2006). Corruption and distribution of public spending in developingcountries. Journal of Economics and Finance, Vol. 30, No. 2, pp. 222—239. https://doi.org/10.1007/BF02761488
16. del Granado F., Martinez-Vazquez J., McNab R. (2018). Decentralized governance, expenditure composition, and preferences for public goods. Public Finance Review, Vol. 46, No. 3, pp. 359—388. https://doi.org/10.1177/1091142116639127
17. Devarajan S., Swaroop V., Zou H. (1997). The composition of public expenditure and economic growth. Journal of Monetary Economics, Vol. 37, pp. 313—344. https://doi.org/10.1016/S0304-3932(96)90039-2
18. Di Bella G., Dynnikova O., Grigoli F. (2018). Fiscal federalism and regional performance in Russia. Russian Journal of Economics, No. 4, pp. 108—132. https://doi.org/10.3897/j.ruje.4.27741
19. Ferreiro J., del Valle M., Gomez C. (2012). Similarities and differences in the composition of public expenditures in the European Union. Journal of Economic Issues, Vol. 46, No. 3, pp. 633—659. https://doi.org/10.2753/JEI0021-3624460303
20. Hagemann A. (2017). Cluster-robust bootstrap inference in quantile regression models. Journal of the American Statistical Association, Vol. 112, No. 517, article 446456. https://doi.org/10.1080/01621459.2016.1148610
21. Hessami Z. (2014). Political corruption, public procurement, and budget composition: Theory and evidence from OECD countries. European Journal of Political Economy, Vol. 34, No. C, pp. 372—389. https://doi.org/10.1016/j.ejpoleco.2014.02.005
22. Hendricks W., Koenker R. (1992). Hierarchical spline models for conditional quantiles and the demand for electricity. Journal of the American Statistical Association, Vol. 87, No. 417, pp. 58—68. https://doi.org/10.1080/01621459.1992.10475175
23. Kisunko G., Knack S., Islam R., Ponamariov B. (2013). Russian Federation: National and regional trends in regulatory burden and corruption. Washington, DC: World Bank.
24. Koenker R. W. (2005). Quantile regression. New York: Cambridge University Press.
25. Koenker R. W., Bassett Jr. G. S. (1978). Regression quantiles. Econometrica, Vol. 46, No. 1, pp. 33—50. https://doi.org/10.2307/1913643
26. Kotera G., Okada K. (2017). How does democratization affect the composition of government expenditure? Journal of Economic Behavior & Organization, Vol. 137, pp. 145—159. https://doi.org/10.1016/j.jebo.2017.03.004
27. Liu C., Mikesell J. (2014). The impact of public officials’ corruption on the size and allocation of U.S. state spending. Public Administration Review, Vol. 74, No. 3, pp. 346—359. https://doi.org/10.1111/puar.12212
28. Liu Q., Ren D. (2015). Research on the structure of public fiscal expenditure based on the cluster analysis methods. Modern Economy, Vol. 6, No. 6, pp. 700—706. https://doi.org/10.4236/me.2015.66066
29. Martinez-Vazquez J., Lago-Peñas S., Sacchi A. (2017). The impact of fiscal decentralization: A survey. Journal of Economic Surveys, Vol. 31, No. 4, pp. 1095—1129. https://doi.org/10.1111/joes.12182
30. Moschovis G. (2010). Public spending allocation, fiscal performance and corruption. Economic Papers, Vol. 29, No. 1, pp. 64—79. https://doi.org/10.1111/j.1759-3441.2010.00048.x
31. Oates W. (2005). Toward a second-generation theory of fiscal federalism. International Tax and Public Finance, Vol. 12, No. 4, pp. 349—373. https://doi.org/10.1007/s10797-005-1619-9
32. Obeng S. (2022). On the determinants and interrelationship of components of government spending. Review of Development Economics, Vol. 26, No. 4, pp. 2414—2435. https://doi.org/10.1111/rode.12921
33. Parente P., Santos Silva J. (2016). Quantile regression with clustered data. Journal of Econometric Methods, Vol. 5, No. 1, pp. 1—15. https://doi.org/10.1515/jem-2014-0011
34. Rahman T. (2008). Determinants of public health expenditure: Some evidence from Indian states. Applied Economics Letters, Vol. 15, No. 11, pp. 853—857. https://doi.org/10.1080/13504850600770970
35. Rodden J. (2004). Comparative federalism and decentralization: On meaning and measurement. Comparative Politics, Vol. 36, No. 4, pp. 481—500. https://doi.org/10.2307/4150172
36. Sanz I., Velázquez F. (2002). Determinants of the composition of government expenditure by functions. European Economy Group Working Paper, No. 13/2002.
37. Shao Q., Tao R., Luca M. M. (2022). The effect of urbanization on health care expenditure: Evidence from China. Frontiers in Public Health, Vol. 10, article 850872. https://doi.org/10.3389/fpubh.2022.850872
38. Shelton C. (2007). The size and composition of government expenditure. Journal of Public Economics, Vol. 91, No. 11—12, pp. 2230—2260. https://doi.org/10.1016/j.jpubeco.2007.01.003
39. Sousa K., Monte P. (2021). Public expenditure composition and fiscal decentralization in Brazilian local governments: An analysis through unconditional quantile regression with longitudinal data. Revista de Administração Pública, Vol. 55, No. 6, pp. 1333—1354. https://doi.org/10.1590/0034-761220200864
40. Tridimas G. (2001). The economics and politics of the structure of public expenditure. Public Choice, Vol. 106, pp. 299—316. https://doi.org/10.1023/A:1005250716104
41. Wang K. M. (2011). Health care expenditure and economic growth: Quantile paneltype analysis. Economic Modelling, Vol. 28, No. 4, pp. 1536—1549. https://doi.org/10.1016/j.econmod.2011.02.008
42. Yu B., Fan S., Magalhaes E. (2015). Trends and composition of public expenditures: A global and regional perspective. European Journal of Development Research, Vol. 27, No. 3, pp. 353—370. https://doi.org/10.1057/ejdr.2015.26
Supplementary files
Review
For citations:
Gurvich E.T., Krasnopeeva N.A. Determinants of public spending composition in the Russian regions. Voprosy Ekonomiki. 2024;(1):5-32. (In Russ.) https://doi.org/10.32609/0042-8736-2024-1-5-32
Views:
880
Email this article 
