Prague Economic Papers 2020, 29(1):29-52 | DOI: 10.18267/j.pep.728

A Local Government Revenue System under Macroeconomic Pressure – The Case of Poland

Beata Guziejewskaa, Katarzyna Walerysiak-Grzechowskaa
a University of Lodz, Lodz, Poland

This study analyses macroeconomic factors, especially the level of GDP and its changes, in terms of their impact on the revenues of Polish local governments from 1999 to 2016. The importance of the factors in managing local finances is growing because of the increasing threats of globalisation and economies becoming more vulnerable to exogenous shocks. This article attempts to identify the structural weaknesses of the local government revenue system in Poland in the context of macroeconomic circumstances. It follows from our research that the property tax and general state grants are relatively insensitive to GDP changes and that they are capable of ensuring local revenue stability during a crisis. Greater sensitivity to economic fluctuations is shown by shared income taxes. The study analyses Central Statistical Office and Eurostat data using an advanced research approach, the key elements of which are cointegration analysis and a vector error correction model.

Keywords: local government revenue system, fiscal decentralisation, local taxes, grants
JEL classification: H70, H71, H77

Received: May 19, 2018; Accepted: April 15, 2019; Prepublished online: September 24, 2019; Published: February 25, 2020  Show citation

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Guziejewska, B., & Walerysiak-Grzechowska, K. (2020). A Local Government Revenue System under Macroeconomic Pressure – The Case of Poland. Prague Economic Papers, 29(1), 29-52. doi: 10.18267/j.pep.728
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