Меньшиков Владимир Сергеевич
2015 Recession in Russia: Demand Side or Supply Side?
Экономика: исследовательская программа
I develop a general equilibrium model for Russia to understand whether the recession in 2015 was caused by the demand side or supply side. The model’s distinctive feature is that a representative household exports a constant endowment of oil each period and imports an intermediate good which is directly used in production as an input. I perform simulation exercises with various shocks on the basis of the calibrated model and show that the economy’s response to a demand side shock is opposite to what was happening at the time of the recession in 2015. My findings also indicate that two supply side shocks – an oil price slump and a rise in mark-up – produce the dynamics very similar to that of actual macroeconomic aggregates, implying that the economic slowdown of 2015 in Russia was more likely to be driven by the supply side. The model is able to generate a fall in potential output as a result of the supply side shocks, therefore stimulating monetary or fiscal policy in an attempt to boost output growth will have little effect.