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Fiscal multipliers in Russia

Sergey Vlasov and Elena Deryugina

No wps28, Bank of Russia Working Paper Series from Bank of Russia

Abstract: The paper covers the theoretical and practical issues related to estimating fiscal multipliers for the Russian economy. The analysis of the main determinants affecting the size of multipliers suggests a relatively low effect of changes in fiscal variables on output growth. Estimation of the general government revenue and spending multipliers are generally in line with these expectations as well as with the results available for emerging market economies and stands at the values of - 0.75 and 0.28 respectively. The negative direct impact on GDP growth from the medium-term fiscal consolidation is estimated as relatively small (cumulatively about 0.3 percentage points through 2018-2020). Fiscal consolidation scheduled for the medium-term is expected to have a negative impact on output. However, since it is intended to be carried out mainly at the expense of the expenditure part of the budget, this should be less harmful to output growth and could promote greater efficiency in public spending. The direct impact from a reduction in expenditures can be fully offset by a significant positive indirect impact on GDP from an increase in confidence about long-term fiscal sustainability.

Keywords: fiscal multipliers; general government revenue; general government spending; Russia; Structural BVAR (search for similar items in EconPapers)
JEL-codes: E62 H20 H50 O47 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cis, nep-mac and nep-tra
Date: 2018-01
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