Reserve funds of federal subjects: A comparative analysis of nature and practice in Russia and the U.S.

Subject. The article reviews four main types of budget reserves of the constituent entities of the Russian Federation, the USA and Canada, i.e. reserve funds of constituent entities of the Russian Federation, reserve funds of supreme executive authorities of the constituent entities of the Russian Federation, Rainy Day Funds and Contingency Reserve Funds of the US and Canadian provinces. Objectives. In Russia, the greatest attention is paid to the budget reserve of the Federal budget, while the budget reserves at the level of subjects of the Federation are underexplored and require close scientific understanding, as they bear the greatest social burden. Methods. The fundamental research method is a comparative analysis of the theoretical representation of scientific articles, statutory documents of the subjects of the Federation and annual reports on reserve funds of the USA and Canada. Results. The results of the analysis of reserve funds of the constituent entities of the Russian Federation, reserve funds of supreme executive authorities of the constituent entities of the Russian Federation, Rainy Day Funds and Contingency Reserve Funds of the USA and Canadian provinces are presented in the form of a matrix-characteristic of these four types of funds by eleven criteria. Conclusions. The performed theoretical and practical analysis of the four types of budget reserves is generalized in the form of directions for improving the Methodological Recommendations for subjects of the Russian Federation regarding the formation and use of regional funds of financial reserves of the Ministry of Finance of the Russian Federation.

State Rainy Day Funds and Government General Fund Expenditures: Revisiting the Stabilization Effect

This study explores the stabilization effect of state rainy day funds (RDFs) on government general fund expenditures (GFEs). We discuss and explicitly illustrate the concept of stabilization effect. Moreover, we utilize the current year’s actual RDF usage as the explanatory variable of interest rather than the previous year’s RDF balance, which most existing studies focus on. A panel data set of states for fiscal years 1998 to 2014 is used in the empirical analysis. Due to the pro-cyclicality of the defined GFE gap and the countercyclicality of RDF usage, their positive correlation revealed in the empirical results demonstrates that the actual RDF usage helps to stabilize state government GFEs in both economic recessions and expansions. We also verify that the previous year’s RDF balance, when interacted with RDF deposit and withdrawal rules, can influence government GFEs, thus demonstrating the importance of RDF rules.