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Russia's Regions: Income Volatility, Labour Mobility and Fiscal Policy

Goohoon Kwon and Antonio Spilimbergo ()

No 5265, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Russia's regions are heavily exposed to regional income shocks because of an uneven distribution of natural resources and a Soviet legacy of heavily skewed regional specialization. Also, Russia has a limited mobility of labour and lacks fiscal instruments to deal with regional shocks. We assess how these features influence the magnitude and persistence of regional income shocks, through a panel vector auto-regression, drawing on extensive and unique regional data covering the last decade. We find that labour mobility associated with regional shocks is far lower than in the US yet higher than in the EU-15, and that regional expenditures tend to expand in booms and contract in recessions. We discuss institutional factors behind these outcomes and policy implications.

Keywords: fiscal policy; labour mobility; panel VAR; Russia (search for similar items in EconPapers)
JEL-codes: C33 E62 H77 J61 P52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo, nep-mac, nep-pbe and nep-tra
Date: 2005-10
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