A multicountry macroeconometric model for the Eurasian Economic Union

Abstract

This paper introduces a multicountry macroeconometric model for the Eurasian Economic Union (EAEU). The model consists of five single-country models of the union member states: Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia. The purpose of the research is to explain the structural relationship between the economies, evaluate the impact of internal and external shocks, and analyze the transmission mechanism of shocks across countries. The single-country models are linked to each other by the equations of bilateral trade and bilateral exchange rate. We find that the model fits actual data on main macroeconomic indicators of the countries in a dynamic ex-post simulation over 2004–2018. We also evaluate the effect of world trade and monetary policy shocks on the economies of the EAEU member states.