Optimizing the management of financial flows based on assessment of regional multiplier effects

Abstract

This article examines the issues of improving the effectiveness in the management of regional financial flows. As their main hypothesis, the authors provide a rationale for the argument that the management of regional financial flows must be optimized on the basis of multiplier economic effects that allow to better assess the performance of regional socio-economic policy. The article presents a multifactor model for managing the financial flows at the regional level, or the matrix of financial flows based on the principles of general economic equilibrium theory, Input—Output balancing method and methodology of national accounts system. The consolidated budgetary balance sheet of the region is presented as an important structural element of the model. A methodology has been developed for integrating the consolidated budgetary balance sheet of the region in the matrix of financial flows. By using the example of individual subjects of the Russian Federation, the authors calculated the matrix multipliers of consolidated budgetary balance sheet that allow to simulate the multiplier economic effects resulting from the impact of different types of exogenous economic factors on the development of regions, and to forecast the impact of changes in the fiscal reallocation on GRP and household income, assess the impact of external investment on the economic growth of the regions and study the effectiveness of federal tax policy at the regional level. The article demonstrates that the value of multiplier effect depends on several factors, including the external trade relations of the region, its dependence on imports, the share of value added in gross output, as well as the propensity of households to savings. The approach proposed by the authors can be used by the government authorities at different levels in the development of their strategies of socio-economic development, assessment of the extent and areas of impact made by various exogenous factors on the economy of the region, as well as in the analysis of the investment initiatives of the private sector seeking the financial support for its projects from the state. The authors propose the areas for improving the management of financial flows based on maximizing the multiplier economic effects in the short and medium term for the regions with a different level of fiscal capacity.