An integrated approach to assessing the level of fiscal policy decentralization

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The main purpose of this study is to introduce an integrated approach to the methodology of assessing the level of fiscal policy decentralization. It is proposed to evaluate the fiscal policy decentralization of the state according to three functional components: decentralization of the process of local budget revenues formation (includes five indicators); decentralization of local budget structure (includes six indicators); decentralization of intergovernmental budgetary relations (includes five indicators). The expediency of forming an integral indicator of the level of fiscal policy decentralization as the geometric mean of three sub-indexes formed by its main functional components is substantiated. It has been proved that the level of fiscal decentralization in Ukraine decreased at the end of 2017, compared to 2004, but was medium with acceptable risks of fiscal policy modernization. Instead, in 2014, the lowest numerical value of the decentralization level was recorded, which corresponded to the critical level of the integral indicator with significant obstacles to the modernization of fiscal policy. The results obtained confirm the feasibility of implementing the decentralization reform in Ukraine, which started in 2014, and demonstrate its effectiveness.

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    • Figure 1. Dynamics of the integral indicator of the level of fiscal policy decentralization in Ukraine
    • Table 1. Identification and grouping of fiscal policy decentralization indicators
    • Table 2. Fiscal policy decentralization indicators by the influence on the formation of local budget revenues
    • Table 3. Fiscal policy decentralization indicators by structure of local budgets
    • Table 4. Indicators of decentralization of intergovernmental relations
    • Table 5. Correlation matrix of indicators of the level of fiscal policy decentralization by influence on the formation of local budget revenues
    • Table 6. Correlation matrix of fiscal policy decentralization indicators by local budget structure
    • Table 7. Correlation matrix of indicators of decentralization of intergovernmental relations
    • Table 8. Calculation of the weighting coefficients of individual indicators of the component of the level of fiscal policy decentralization by influence on local budget revenues formation
    • Table 9. Calculation of the weighting coefficients of the component of the level of fiscal policy decentralization for the structure of local budgets
    • Table 10. Calculation of the weighting coefficients of the single indicators of the component of the level of decentralization of intergovernmental budgetary relations
    • Table 11. Standardized single indicators of the component of the level of fiscal policy decentralization for influence on the formation of local budget revenues in 2004–2017
    • Table 12. Standardized single indicators of the component of fiscal policy decentralization for the structure of local budgets in 2004–2017
    • Table 13. Standardized single indicators of the component of the level of decentralization of intergovernmental relations in 2004–2017
    • Table 14. Sub-index equation and integral indicator of the level of fiscal decentralization
    • Table 15. Calculation of the integral indicator of the level of fiscal policy decentralization for the 2004–2017