The Impact of Fiscal Decentralization on Selected Macroeconomic Variables at the County Level in Romania from 1999 to 2023

In addition to the information held at the national level, regional statistics can provide extremely valuable information regarding disparities at the local level. Thus, this paper explores the impact of fiscal decentralization on some important macroeconomic parameters at the subnational level. The article uses a panel econometric model to analyze the impact of fiscal decentralization on variables such as employment, nominal salary and gross added value at the county level in Romania in the period 1999–2023. We used the method of ordinary least squares and the techniques of extrapolation, interpolation, and Granger causality. The findings reveal that fiscal decentralization can improve certain parameters, but at the same time it must comply with certain conditions for a substantial effect at the local level. Beyond the need for a certain level of responsibility and local institutional autonomy, for a relevant impact, the decentralization process also requires a better correlation between the decentralization of local expenditures and revenues and an effective prioritization of objectives.