Political Economy of Fiscal Equalization: The Case of Croatia

  • Anto Bajo University of Zagreb, Faculty of Economics and Business
  • Marko Primorac University of Zagreb, Faculty of Economics and Business, Institute of Public Finance
Keywords: fiscal equalization, intergovernmental transfers, tax revenue sharing, central government grants, political economy, Croatia


Due to ineffectiveness in mitigating fiscal inequalities, Croatian fiscal equalization system has recently been reformed. Before that, criteria for application of fiscal equalization instruments were based on a status of local government units in areas of special national concern and hill and mountainous areas. The aim of this paper is to examine the relationship between the use of equalization instruments and political structure of local government units in 2010. The research revealed a statistically significant relationship between the political alignment of local and central government and the preferential status at areas of special national concern and the distribution of grants through the income tax return.

Author Biography

Anto Bajo, University of Zagreb, Faculty of Economics and Business



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