DOI: 10.32609/j.ruje.12.118859

Authors: Angelina E. Shpilevaya, Mikhail Y. Gareev, Kristina V. Nesterova, Andrey V. Polbin

Abstract: This paper presents a dynamic overlapping generations general equilibrium model for the Russian economy to assess the economic and fiscal effects of the 2018 pension reform, which raised the statutory retirement age. The model incorporates realistic demographic projections, variable labor supply responses, and exogenous scenarios for oil prices. It evaluates the impact of the reform across a range of future demographic and external conditions by comparing post-reform trajectories of macroeconomic aggregates, public deficits, and tax rates with baseline scenarios without reform. The results show that raising the retirement age moderately reduces consumption in the short run but leads to more robust growth in output, investment, government spending, and exports in the long term. Pension reform improves fiscal sustainability by lowering the required budget-balancing VAT rate and pension fund deficit, especially under adverse demographic conditions or low oil prices. The fiscal effect of reform is muted in optimistic demographic scenarios with strong labor force growth, but remains significant when population aging intensifies fiscal pressure. These findings highlight the importance of structural reforms for long-term macroeconomic stability and underscore the critical role of demographics and external shocks in shaping pension system performance.

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DOI: 10.32609/j.ruje.10.141382

Authors: Oleg V. Buklemishev

Abstract: The article examines historical aspects, general economic logic, and theoretical discussions on the policy of stimulating the economy through increased government appropriations for defense items. It provides a brief overview of empirical studies on economic effects of defense spending in Russia and other countries. The secondary nature and low manageability of economic effects of defense policy are emphasized. The size of the fiscal impulse due to defense items of government expenditure, its positive and negative effects are analyzed in the Russian economy for the period 2022–2024. In addition to the unlikely gains through security and supply channels, the limited availability of free production capacity and labor force are stressed among the factors hindering the positive demand effects of increased defense spending. This gives rise to inflationary consequences, as well as the contradiction between tightening monetary conditions and continuing fiscal stimulation. A conclusion is made about the prevalence and possible aggravation of negative outcomes of sustaining and expanding military outlays.

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DOI: 10.32609/j.ruje.9.111967

Authors: Eugene L. Goryunov, Sergey M. Drobyshevsky, Alexey L. Kudrin, Pavel V. Trunin

Abstract: The paper examines the factors of global inflation acceleration in 2021–2022. We consider primarily the developed economies, where rates of inflation over the last two years have exceeded multi-year highs and have significantly exceeded target levels. We find that the cause of accelerating inflation was an imbalance between aggregate demand, which started to increase rapidly in the second half of 2020 as economies began to adapt to the circumstances of the pandemic, and aggregate supply, which encountered persistent constraints associated with interruptions in global supply chains. Significant support for demand was provided by fiscal stimulus that was unprecedented in scale and was accompanied by policy interest rates reaching extremely low levels, and by active injections of liquidity by central banks. The willingness of governments to implement ultra-expansionary monetary and fiscal policies can to a considerable degree be attributed to the fact that during the previous decade large budget deficits, zero interest rates, and programs of quantitative easing had not resulted in macroeconomic destabilization. We examine the view of many central banks that the inflationary wave would not be long-lasting, which was a crucial reason for delaying the interest rates increase. We consider the conditions in which the leading economies might fall into the stagflation trap.

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DOI: 10.32609/j.ruje.9.105790

Authors: Elizaveta V. Martyanova, Andrey V. Polbin

Abstract: This paper proposes a general equilibrium model with the entrepreneurial sector for the Russian economy. The novelty of the model lies in several points. First, the model is a small open economy. Second, it includes the entrepreneurial sector. Third, the model reflects the main features of the Russian economy. Five experiments were conducted, for which steady states and transitions were computed. These experiments included: (1) an export price shock, (2) redistribution of government consumption between the corporate and entrepreneurial sectors, (3) relaxation of collateral requirements, (4) a credit rate subsidy for entrepreneurs, (5) VAT for entrepreneurs. The export price shock results in lower entrepreneurial output due to higher wages in the short run, but in the long run the positive effects of increased demand and assets lead to higher output. Increased government consumption of entrepreneurial goods leads to a reallocation of resources from the corporate sector to the entrepreneurial one. The relaxation of collateral requirements leads to a sharp increase in entrepreneurial investment and capital and a decline in the number of entrepreneurs, which means that they become bigger. The credit rate subsidy leads to an increase in capital in the entrepreneurial sector, and then in output. The cost of subsidies leads to a decrease in lump-sum transfers, but this does not lead to a significant change in household consumption. The introduction of a value-added tax on entrepreneurial goods leads to a redistribution of resources from the entrepreneurial sector to the corporate one, lower household consumption and higher GDP.

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DOI: 10.32609/j.ruje.8.90947

Authors: Marek Dabrowski

Abstract: The paper contains a retrospective analysis of macroeconomic policy and reforms in the countries of the former Soviet Union (FSU) from 1992 to 2021, after obtaining political and economic independence in 1991. Special attention is given to problems of macroeconomic stabilization and economic growth. As a result of structural distortions inherited from the Soviet economy and the slow pace of economic and institutional reforms, the FSU countries suffered from a long and deep output decline in the 1990s. Their post-transition growth recovery in the 2000s did not last long. Furthermore, they remain vulnerable to both domestic and external economic shocks. Given the limited predictability of post-COVID global economic trends and the damaging consequences of the war in Ukraine, this vulnerability will likely continue in the next couple of years.

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DOI: 10.32609/j.ruje.5.49417

Authors: Marek Dabrowski

Abstract: In the decade of the 2010s, the pace of economic growth in Russia slowed down to an annual rate of below 2% and most forecasts suggest that this is will be the new “normal” for the Russian economy at least in the medium-term. While politically and socially disappointing, such a growth slowdown is unavoidable due to adverse demographic trends. A combination of a shrinking working-age population and population aging must lead to a lower growth pace as compared to the period when the working-age population was still increasing and the effects of population aging were limited (the decade of the 2000s). Compensatory measures such as a gradual increase in the retirement age and an open labor migration policy, although economically positive, can only partly mitigate the negative effects of a shrinking domestic labor force. In this respect, Russia does not differ from other European countries and some Asian countries. However, demography and shrinking labor supply cannot fully explain low potential growth. Stagnation in total factor productivity is another reason. It results from a poor business and investment climate, difficulty in diversifying away from the dominant role of the hydrocarbon sector, and deteriorating political and economic relations with the US and EU which limit trade, investment and innovation opportunities. To increase its potential growth, Russia needs comprehensive economic and institutional reforms that, in turn, will be conditioned by political reforms and by improved economic and political relationships with the US, the EU and Russia’s neighbors.

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DOI: 10.1016/j.ruje.2015.12.002

Authors: Evgeny Goryunov, Lawrence Kotlikoff, Sergey Sinelnikov-Murylev

Abstract: The fiscal gap is an indicator of the long-term balance of public finance and is calculated based on the intertemporal government budget constraint, which links government tax revenues and expenditures over long intervals. The estimate of the fiscal gap for the Russian general government has been determined according to three scenarios with varying assumptions regarding demographic trends, productivity growth rates, oil and gas prices and the quantity of extractable reserves. The calculations show that the current fiscal policy cannot provide for the stability of public finance in the long run. The main factors of budget imbalances are the growth of pension and health care expenditures caused by demographic trends and the gradual decline in tax receipts from the oil and gas sector.

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