engleski

Local government tools in coping with the crisis: the case of Croatia

The paper tries to determine possibilities of local governments in combating and preventing negative impact of economic crisis. Theoretical arguments are supported by the case study analysis of local government sector in Croatia. Even though there is an ongoing decrease of local budget revenues throughout the country and problems of illiquidity and servicing obligations are increasing, there is no proactive reaction. The approach used so far is focused on reducing investments and conducting occasional minor interventions in scope of local tax or expenditure policy. The main conclusion of the paper that local public sector in Croatia does not induce problems for macroeconomic stability and in the same time cannot provide significant countercyclical measures in terms of local fiscal policy. However, theoretical foundations provide guidelines for conducting more responsible local government fiscal policies that would endorse the tools that support long-term fiscal sustainability.

local government; crisis; tax policy; expenditure policy; fiscal sustainability

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