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  • Macroeconomic effects of fiscal and investment (including infrastructure) policy in Russia against the backdrop of increasing external environment volatility

Macroeconomic effects of fiscal and investment (including infrastructure) policy in Russia against the backdrop of increasing external environment volatility

Priority areas of development: economics, management, state and public administration
2019
The project has been carried out as part of the HSE Program of Fundamental Studies.

Goal of research

The goal of the research is estimation of the current and mid-term effects of the changes in tax policy, budget and investment (infrastructure investment as well) policy, on the GDP growth, inflation and key indicators of the economic structure. Also the research is aimed to analyze impact of the external economic conditions volatility on the balance of payments, exchange rates and other macroeconomic indicators.

The goal includes the following tasks:

  • Analysis of the key macroeconomic indicators and economic growth factors, structure and dynamics of the public and private investments (include infrastructure investments), external trade and balance of payments indicators, key parameters of the households income, expenditures and savings, budget system revenue and expenditures composition;

  • Analysis of the external shocks impact on the balance of payments and Russian economy development prospects;

  • Analysis of the key tax, budget and investment policy decisions, estimation of respective macroeconomic consequences;

  • Estimating the short-term prospects of the Russian economy on the base of the regular interviewing of the macroeconomic forecasting experts and using the cyclical indicators system;

  • Mid-term forecasting of the Russian economy indicators using macroeconomic modelling tools.

Methodology

For the long-term estimations of the public policy effects potential GDP model with long-term growth factors (labour, capital, human capital) and total factor productivity was used.

For mid-term estimations multidimensional macroeconomic model was used. It allows for the imitation modelling of the various scenarios of the Russian economy development, including income and use accounts, budget, balance of payments, household income and expenditures balance, monetary indicators.

For short-term trends estimation statistic and econometric data analysis approaches are used, as well as interviewing of the economic forecasting specialists, and the analysis based on the composite indices system which lead the general economic dynamics of 1-2 quarters, developed in the Development Center Institute.

Within the project regular (per quarter) interviewing of the macroeconomic experts was continued. The interviewee list includes about 30 participants from independent macroeconomic analysis centers, scientific organizations, analytical departments of companies, commercial and investment banks. The research topic is estimation about 20 macroeconomic indicators by interviewees, characterizing mid-term and long-term expectations about the Russian economy trends, external economic conditions and investment conditions, used for the consensus forecast.

Empirical base of research

The informational base of the research includes the open data sources provided by Federal State Statistics Service of Russia, Bank of Russia, Ministry of Finance of Russian Federation, Russian Federal Treasury, Federal Tax Service of Russia, Federal Customs Service.

Results of research

The research results include the following:

The key macroeconomic indicators and economic growth factors were analyzed, as well as structure and dynamics of the public and private investments, external trade and balance of payments indicators, key parameters of the households income, expenditures and savings, budget system revenue and expenditures composition;

External shocks were analyzed in the context of their impact on the balance of payments and Russian economy development prospects;

The key tax, budget and investment policy decisions, and respective macroeconomic consequences were estimated;

The short-term prospects of the Russian economy were analyzed by regular interviewing of the macroeconomic forecasting experts and by using the cyclical indicators system;

Mid-term forecast of the Russian economy key indicators was developed using macroeconomic modelling tools.

It is shown on the basis of the forecast that the soft landing of the oil prices will affect the Russian economy in a negative way, but inhomogeneously. The economic growth will be supported by the export real growth in the coming years. To take all the factors into account, the GDP growth will accelerate from 1.2% in 2019 to 1.5 in 2020 and 1.7 in 2021-2022 years.

The real wages growth will be about 2% and is expected to be sustainable. After decrease to 3.0% in 2019 inflation will approach to 2.0% in the 1st half-year 2020, and then will increase to the target level under the disinflationary effects depletion: 3.4% in 2020 and about 4.0 in 2021-2022 years.

The main risk for the Russian economy in 2020-2022 years is the probable further slowdown, if not recession, of the global economy.

Level of implementation, recommendations on implementation or outcomes of the implementation of the results

Practical importance of the research includes the possibility to use the research findings in preparing regular informational and analytical reports, addressed to interested organizations Commentaries on forecasting social and economic development of Russia, Federal budget Law project, projects of Guidelines for the Monetary Policy of the Bank of Russia, and recommendations addressed to President, the Government and the Bank of Russia. The results can be implemented for informational, expert and analytical support of Government and Bank of Russia on economics and economic policy questions.