2021. December 07. 10:27

Modelling Intergovernmental Fiscal Equalisation in Zimbabwe: Towards Resolving Vertical and Horizontal Fiscal Imbalances

Vincent Chakunda
PhD, Senior Lecturer,
Midlands State University, Department of Governance and Public
Management, Gweru, Zimbabwe

Canicio Dzingirai
PhD, Lecturer,
Midlands State University, Department of Economic Sciences, Gweru,
Zimbabwe

Arthur Chikerema
Lecturer,
Midlands State University, Department of Governance and Public
Management, Gweru, Zimbabwe

Published in: Public Finance Quarterly 2021/4. (p. 535-550.)


Summary: The paper deploys a mixed method approach in modelling intergovernmental fiscal equalisation in Zimbabwe. The desirability of the proposed fiscal capacity model is premised on the argument that the anecdotal vertical fiscal imbalance is a structural issue whose antidote is reassignment of revenue or expenditure responsibilities among different governmental tiers. The fiscal capacity model, as we have proposed, is underpinned by five variables, namely, total amount to be allocated as declared in the national budget, poverty index (poverty prevalence rate), population of the area, size of the local economy (revenue/GDP ratio) and the estimated intrinsic value of the sub-soil natural resource endowments of the area.

Keywords: intergovernmental fiscal equalisation, intergovernmental transfers, vertical fiscal imbalance, horizontal fiscal imbalance, fiscal capacity model, poverty index, subnational government

JEL-codes: H2, H5, H7, I3

DOI: https://doi.org/10.35551/PFQ_2021_4_5 


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