Fiscal gap is an indicator of long run sustainability of government finance. It is derived from intertemporal budget constraint which connects flows of budget outlays and receipts aggregated along decades. In order to get an estimate of Russia’s general government fiscal gap we consider three scenarios which are based on different assumptions regarding demographic trends, productivity growth, extractable reserves of oil and natural gas, long-term price of oil and natural gas, etc. Estimated value of fiscal gap implies that current fiscal policy cannot provide budget sustainability in the long run. There are two major factors of the budget imbalances: rising health and pension expenditures due to demographic trends and shrinking role of tax revenues from the energy sector due to extraction growth rate projected to be lower than GDP growth. This study is an extension of (Goryunov et al., 2013).
This paper is dedicated to the memory of Yegor Gaidar, who founded the Gaidar Institute and for whom fiscal sustainability and responsibility was of paramount importance. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research. At least one co-author has disclosed a financial relationship of potential relevance for this research. Further information is available online at http://www.nber.org/papers/w19608.ack NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
In recent years Bank of Russia has made several major changes in its monetary regime, including elimination of the exchange rate corridor and introduction of the key rate as the main monetary policy instrument. The article discusses these developments in the context of long-term priorities of the monetary authority. We put emphasis on the extent to which monetary policy should stimulate economic growth and assess whether the policy of the Central Bank of RF was excessively tight in 2010-2014. In order to do that we use the real interest rate on short-term loans in the interbank market as an indicator of monetary policy tightness. Cross-country comparisons together with the analysis of dynamics of selected indicators suggest that Bank of Russia’s policy was rather soft. We conclude with comments regarding tactics of monetary policy under current turbulent macroeconomic conditions.
This paper develops a large-scale, dynamic life-cycle model to simulate Russia's demographic and fiscal transition under favorable and unfavorable fossil-fuel price regimes. The model includes Russia, the U.S., China, India, the EU, and Japan+ (Japan plus Korea). The model predicts dramatic increases in tax rates in the U.S., EU, India, and Russia. Indeed, the increases are so large as to question their political feasibility let alone their actual collection given the potential for tax avoidance and tax evasion.
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