11 In this paper total federal budget transfers to regions were defined as the sum of mutual settlements, subventions, short-term loans, and budget loans received by the regions (World Bank, 1995a). Additionally, in 1994 and 1995, grants received by the regions under the Federal Fund for the Support of the Regions (created in 1994) were included. At the very least, mutual settlements were received by all regions and thus, total transfer data exist for all regions in all years.'<sup>5</sup> All information on non-fiscal indicators derive from various Goskomstat publications. Many of them are the same used by Kitty Stewart in her study (Stewart, 1996), who kindly provided us with access to her data base. Data for the autonomous regions, which are the smallest administrative units in terms of population, are not available in the case of some variables, and for this reason sample sizes of 77 and 78 instead of 87 will be noted in some regressions. No significant differences in statistical results associated with the change in the sample size were found.

In the regressions for each year, variables from that year are used, unless otherwise indicated. In 1995, a number of social and demographic variables from 1994 were used in the absence of these data for 1995; but these would not have changed appreciably from one year to the next. The estimates for real household incomes for 1995 were calculated based on the nominal mid-year data, while for other years average annual nominal incomes were used.

# **Factors used in the analysis**

Our analysis was focused on the identification of determinants of overall national economy expenditures as well as the components of those expenditures. In all, a total of twentyfour unique (that is, not counting twice the same type of data for different years) independent variables were examined as potential subsidy determinants in the regression analysis. These variables represent both supply-side factors characterizing the availability of financial resources in regions which potentially might be spent on subsidization, and demand, or "need" factors. 16 The analysis below is based on the following descriptive model of the subsidy allocation process. Regional governments allocate subsidies according to signals and pressures exercised by local interest groups and taking into account their overall budget constraints. Our demand-side factors listed below reflect various aspects of regional intensity of the economic crisis. In other words, it is assumed that these indicators measure, first, to what extent local economic agents are affected by current econornic and social difficulties (i.e. how strong is their need for help?) and, second, how intensively they pressure regional governments for budget support (i.e. how strong _'5_ The only exception is Bashkortostan, which did not report receiving any transfers in 1995. _16_ Note that our definition of demand-side factors is different from the traditional approach used in political science, in particular, for analysis of inter-governmental fiscal relations (Stein, 1981). In such an approach, supply-side factors are primarily the objectives of the agency (e.g. the Central Government) allocating funds. At the same time, our definition of demand-side factors as characteristics of recipients' need is quite traditional.