Fiscal federalism and government size in transition economies: the case of Moldova

This paper examines the relationship between fiscal decentralization—the assignment of revenue sources and expenditure functions across government levels—and government size in Moldova. The empirical results—based on data for a cross‐section of Moldovan sub‐national government in 1998—suggest that fiscal decentralization is associated with larger sub‐national governments and that the country's revenue‐sharing system imposes a constraint on sub‐national revenue mobilization capacity.