The distributional outcomes of one-size-fits-all policy response to societal disruptions on local government transfer dependence

Abstract

This research explores how the one-size-fits-all government-led counter-cyclical policy response to societal disruptions, in this case COVID-19, produces distributed fiscal autonomy outcomes across local governments. The Wilcoxon matched-pairs signed-ranks test reveals statistically significant results in a before-after research design. The overall median local authority transfer dependence during the post-intervention year was lower than in the pre-intervention year by 14.2% for Romanian local governments. However, the lower horizontal fiscal gap indicates that counter-cyclical measures were less effective in addressing the adverse effects of disruption on local governments’ revenues in larger local economies compared to those in smaller ones.

Keywords

• public economics
• interjurisdictional differentials
• intergovernmental relations
• disaster aid