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A Study of World and Russian Economic Cycles and the Role of Economic Cycles in the Development of Russian Economy

2010

The cyclic nature of the Russian economy, its susceptibility to periodic alternation of upswings and downswings has not yet been sufficiently studied, though the recent crisis has brought forth a torrent of publications that have touched upon different aspects of crisis elements experienced by Russia. These publications, however, are mostly opinion journalism and so far cannot provide an overall picture about the character of the evolving global economic crisis, its driving forces and possible implications, as well as a recovery mechanism and the extent of effect of these processes on Russian economy. The risks faced by the Russian economy in the global arena have not yet been fully identified or sized up, and possible actions to prevent potential threats have not been thoroughly evaluated. Furthermore, the methodological instruments, that would take world economic cycles into sufficient account when forecasting key parameters of the Russian economy, have not yet been developed. 

The object of the research is economic cycles in both the world and Russian economy and the channels of exposure to external shocks suffered by a national economy. The cyclical processes in industries, banking and household sectors are also under study. The approaches to the analysis of different monetary policies, in particular, the inflation targeting policy and a floating exchange rate, are outlined. The causes of increased cyclical instability in Russian economy are given close examination together with the predictive qualities of available composite cyclical indicators.

The main objective of this work is to clarify the role of cyclical factors in the dynamics of key national economic indicators. This objective was achieved by pursuing several interrelated goals, including the following:

  • Analysis of global imbalances, which are one of the most important causes of upturns and downturns in the world and Russian economy, and identifying major external risks for the Russian economy;
  • Analysis of cyclicality in different sectors of the Russian economy (primarily, the analysis of stock behavior and identifying statistical dependencies using Fourier series);
  • Reviewing the crises in the Russian banking system and identifying their factors;
  • Evaluating the possible effectiveness of the inflation targeting policy in Russia given that inflation depends both on monetary policy parameters (interest rates, money supply indicators, loan indicators) and external pricing factors as well as internal non-monetary factors (growth in tariffs for the services of natural monopolies, petrol prices, population income);
  • Studying the behavior of individual income components at the different stages of the economic cycle and their relationship with the dynamics of consumer demand;
  • Analysis of the available composite indicators of economic cycles and evaluating their behavior during the recent economic downturn;
  • Analysis of the exchange rate policy effects on the cyclical stability of the economy, as well as factors contributing to the cyclical vulnerability of Russian economy that led to its significant slowdown during the 2008-2009 recession.

In the course of this research, a statistical, graphical and econometric analysis was carried out of detailed information contained in the databases of Rosstat (Russian State Statistics Committee), the Bank of Russia, Ministry of Finance, Federal Customs Service, International Monetary Fund, and other international and national sources, as well as hallmark academic studies.

As a result of this research, specific features of the cyclical dynamics in the Russian economy – its real and banking sectors – were studied in the current context of economic globalization. The information on all composite cyclical indicators available for Russia was collected; the dynamics of changes in stocks by types of activities with a two-letter code was studied; the relationship between internal food/petrol prices and fluctuations in the world prices was traced.  

Publications:


Миронов В. В. Упали, но не отжались (о факторах экономического кризиса в России) // Прямые инвестиции: журнал Сбербанка России. 2010. № 5