The Evaluation of Fiscal Policy Effectiveness in Russia

The importance of assessing the impact of fiscal policy on real GDP in Russia has increased due to the recent large-scale fiscal changes (implementation of national projects, increase in the value added tax rate and fiscal stimulus during the crisis in 2020). This paper is devoted to the evaluation of fiscal multipliers for analyzing the effectiveness of fiscal policy in Russia. Applying structural vector autoregressive models, this study estimates fiscal multipliers both for the aggregate government revenues and expenditures, and for the budget spending components according to the macroeconomic classification (government consumption, investments, transfers). The obtained results indicate a relatively low effectiveness of fiscal policy in Russia: the point estimate of the aggregate government expenditure multiplier accumulated over the year is about 0,15. At the same time, the most significant impact on real GDP is exerted by the expenditures on government consumption and transfers (the estimated multipliers accumulated over the year are 0,38 and 0,40 respectively). This is consistent with the results of the previous studies and similar estimates for developing countries.