In a federation as large and diverse as Russia, the policies of regional and local governments play a key role in determining economic outcomes. The state of intergovernmental and fiscal federalist relations directly affects the nature of these policies. Several existing studies highlight common...

Journal of Comparative Economics, March 1998. <p> We develop a theory for a transition economy under which an unbalanced development strategy that favors special economic zones emerges as a response to two critical problems: (1) political pressure to satisfy certain social expenditure requirements,...</p>

It is argued that the success of an economic transition program in the former U.S.S.R. depends primarily on the creation of "fiscal legality." The problem of creating fiscal legality is placed in the particular economic, political, and social context of the former Soviet Union. The primary...

Motivated by the recent experience in the Russian Federation, this paper examines the implications of imposing central control on the budgetary activities of a subnational government. In a highly stylised multi-task principal-agent model (Holmstrom and Milgrom (1991)), a central government...

A concept of coordination costs is incorporated into a nonlinear variant of the model studied by Freixas, Guesnerie, and Tirole (1985) on the dynamic regulation of a firm with adverse selection and no commitment (the ratchet effect). Greater coordination costs give rise to two opposing effects....

The classical Soviet-type system operates in the virtual absence of economic legality, which is a prerequisite to a successful transition to a market economy in the Soviet Union and the nations of Eastern Europe. In the absence of economic legality, the leadership of these countries will not be...