scholarly journals Financial Sector’s Role in Transmission of Monetary and Fiscal Shocks in Russian Economy: Estimation Under Different Assumptions About Production Sector

2021 ◽  
Vol 13 (6) ◽  
pp. 25-53
Author(s):  
S.S. Lazaryan ◽  
◽  
M.A. Elkina ◽  
Keyword(s):  
Developing Economies ◽  
Financial Frictions ◽  
Policy Instruments ◽  
Financial Sector ◽  
Dsge Models ◽  
Production Sector ◽  
Sector Model ◽  
Russian Economy ◽  
Fiscal Shocks

The financial sector plays a crucial role in the economy, not only being a simple intermediary between creditors and borrowers, but also having a significant impact on the economy’s development and its various characteristics. For this reason, accounting for financial sector peculiarities is critical when developing policy-oriented general equilibrium models for practical use. This drives the interest of many researchers in development of approaches to describing the financial sector and financial frictions in DSGE models. In financial frictions models one can describe the production side of the economy in a simplistic way. However, it could be important to model the production sector in more detail. For instance, separating tradable and non-tradable sectors of the economy could be of great significance, especially for developing economies which depend on foreign trade a lot. In this paper we analyze the role of the financial sector and how important it is for transmission of monetary and fiscal shocks under different assumptions about the production sector. Namely, we compare two-sector economy with tradable and non-tradable sectors with a simplistic model which assumes that the economy produces only tradable goods. According to the results, financial frictions impact tradable and nontradable sectors asymmetrically. In the two-sector model the effect of financial frictions is quantitatively smaller than in the one-sector economy. Therefore, using the latter simplifying assumption could lead to overestimating the role of financial frictions in the transmission of monetary and fiscal shocks. In addition, the paper provides estimates of how changes in monetary and fiscal policy instruments impact the Russian economy given the existence of financial frictions.

scholarly journals Financial Frictions in Macroeconomic Models

2018 ◽  
Author(s):  
Alfred Duncan ◽  
Charles Nolan
Keyword(s):  
Financial Stability ◽  
Financial Frictions ◽  
Financial Sector ◽  
Financial Intermediaries ◽  
Financial Instability ◽  
External Shocks ◽  
Macroeconomic Dynamics ◽  
Macroeconomic Models ◽  
Macroprudential Policies

In recent decades, macroeconomic researchers have looked to incorporate financial intermediaries explicitly into business-cycle models. These modeling developments have helped us to understand the role of the financial sector in the transmission of policy and external shocks into macroeconomic dynamics. They also have helped us to understand better the consequences of financial instability for the macroeconomy. Large gaps remain in our knowledge of the interactions between the financial sector and macroeconomic outcomes. Specifically, the effects of financial stability and macroprudential policies are not well understood.

scholarly journals Impact of Monetary Policy Shocks on Macroeconomic Fundamentals: The Role of Asymmetry and Uncertainty in Nigeria

2019 ◽  
Vol 6 (11) ◽  
pp. 110-129
Author(s):  
LeeLee N. Deekor
Keyword(s):  
Monetary Policy ◽  
Developing Economies ◽  
Policy Instruments ◽  
Monetary Policy Shocks ◽  
Asymmetry Effect ◽  
Monetary Authorities ◽  
Policy Shocks ◽  
The Asymmetry ◽  
Effect Of Monetary Policy

That monetary policy is made in an environment of substantial uncertainty is only a commonplace knowledge. But for the peculiar vulnerability of monetary authorities to exogenous conditions in developing economies, we hypothesized for the role of uncertainty in the asymmetry effect of monetary policy. Essentially, we explore both money supply and interest rate process using linear and non-linear ARDL to show that political pressure such as variability in government borrowing has the potential to accelerate the asymmetry effect of monetary policy. We also observe the asymmetry effect of monetary policy to be sensitive to the choice of monetary policy indicator. These findings suggest that monetary authorities must consider not only the effectiveness or otherwise of monetary policy instruments to affect the target policy goals, but also the fact that not all the target variables react in a similar way to expansionary and contractionary monetary policy shocks.

What does a relative price of investment wedge reveal about the role of investment-specific technology?

2019 ◽  
Vol 19 (2) ◽  
Author(s):  
Joel Wagner
Keyword(s):  
The United States ◽  
Relative Price ◽  
Dsge Models ◽  
Sudden Increase ◽  
The Great Recession ◽  
Sector Model ◽  
Competing Models ◽  
Highly Correlated ◽  
Specific Technology

Abstract In order to identify investment-specific technology (IST), most DSGE models assume a perfect inverse relationship between IST and the relative price of investment (RPI). This paper explores this relationship and provides evidence that the RPI also responds to changes in market power, which I find constitutes a third of volatility in the RPI. To corroborate this conclusion, two competing models are produced; the first is a two-sector model with a wedge separating the identification of IST with the inverse of the RPI. The RPI wedge is then estimated using Bayesian estimation techniques. A second, richer two-sector model is produced, where firms can vary markups depending on the number of competitors. This paper finds that changes in relative markups are highly correlated with the RPI wedge and help explain the sudden increase in the RPI following the Great Recession in the United States. In addition, with endogenous price markups, non-IST shocks can explain over a third of the volatility observed in the RPI, with marginal efficiency of investment contributing approximately 30 percent of the volatility in the RPI.

scholarly journals Where modern macroeconomics went wrong

2018 ◽  
Vol 34 (1-2) ◽  
pp. 70-106 ◽  
Author(s):  
Joseph E Stiglitz
Keyword(s):  
Financial Crisis ◽  
Information Economics ◽  
Financial Sector ◽  
Dsge Models ◽  
Representative Agent ◽  
Quarter Century ◽  
Economic Behaviour ◽  
The Past ◽  
Key Aspects

Abstract This paper provides a critique of the DSGE models that have come to dominate macroeconomics during the past quarter-century. It argues that at the heart of the failure were the wrong microfoundations, which failed to incorporate key aspects of economic behaviour, e.g. incorporating insights from information economics and behavioural economics. Inadequate modelling of the financial sector meant they were ill-suited for predicting or responding to a financial crisis; and a reliance on representative agent models meant they were ill-suited for analysing either the role of distribution in fluctuations and crises or the consequences of fluctuations on inequality. The paper proposes alternative benchmark models that may be more useful both in understanding deep downturns and responding to them.

scholarly journals CURRENT TENDENCIES OF THE GLOBAL INDUSTRIAL POLICY AND RUSSIAN INDUSTRIAL RESTRUCTURING PRIORITIES

2015 ◽  
pp. 255-262
Author(s):  
A. A. Chernyshev
Keyword(s):  
Industrial Policy ◽  
Innovation Systems ◽  
The State ◽  
National Innovation Systems ◽  
Production Sector ◽  
Russian Economy ◽  
Institutional Infrastructure ◽  
Target Values ◽  
The Government

This article is devoted to the analysis of restructuring in the Russian production sector basing on the worldwide experience of innovative industrial policy with the focus on the role of the government in this process. While the author in the article identifies de- and re-industrialization trends, cluster systems organization as well as development of national innovation systems (NIS) as crucial processes in the global industry great attention is paid to the role of the state in these processes. International practice in developed countries shows that the state plays key role in industrialization process acting as a brainchild in setting target values for R&D industrial expansion implementing institutional, infrastructure, preferential as well as tax relief forms of support. Major advanced economies devote considerable attention to creation of supportive environment for industrial development, including implementation of national innovation systems (NIS) as well as elaboration of the institutional infrastructure industry development programs. Global market industrial trends analysis shows that production sector together with its innovative development will remain a major priority and a driving force in global economic growth. Taking into account present situation of the Russian economy which can be described as critical, time factor is considered to be of great importance, making it necessary to adopt accelerated development model in the Russian economy reforms. A key question to consider is what actions should be adopted by the government to ensure acceleration in economic development of the country.

Lending to the non-financial sector: Opportunities and limitations

2016 ◽  
pp. 63-74 ◽  
Author(s):  
O. Berezinskaya
Keyword(s):  
Financial Sector ◽  
Financial Statements ◽  
Comprehensive Analysis ◽  
Successful Implementation ◽  
Credit Availability ◽  
Credit Risks ◽  
Russian Economy ◽  
Credit Institutions

This paper analyzes borrowing by non-financial sector of the Russian economy. Its topicality is determined by the importance of credit for a successful implementation of the “window of opportunities”, a decrease in credit availability and high credit risks in a number of industries. The comprehensive analysis of lending to non-financial sector of the economy is based on financial statements of corporations and credit institutions as well as on evaluations of the Bank of Russia. The paper highlights performance dynamics of businesses in non-financial industries and their current indebtedness and the role of Russian banks in providing them with credit. Imbalances and risks for growth of lending to the non-financial sector of the economy are revealed.

scholarly journals Financial Sector of Russia: 30 Years of High Volatility Inside Global Finance

2021 ◽  
Vol 14 (5) ◽  
pp. 119-142
Author(s):  
Ya. M. Mirkin
Keyword(s):  
Financial Institutions ◽  
Global Economy ◽  
Developing Economies ◽  
International Comparisons ◽  
Financial Sector ◽  
Capital Export ◽  
Middle Income ◽  
Sector Model ◽  
Financial Depth ◽  
High Volatility

The article provides a comparative analysis of the financial sector of Russia and other countries in the structure of the global economy; international comparisons are made over 30 years in terms of financial depth, including monetization, “saturation” with loans and securities, inflation, and interest rate. The inadequacy of the size of the financial sector to the size of the Russian economy is shown, the extremely high volatility of financial variables is analyzed (using the example of the exchange rate and changes in the institutional network (banks and non-bank financial institutions)). The model of the financial sector is revealed (excessive role of the state, overconcentration in the markets and among financial institutions, oligopolization, “monetary desertification” of regions, excessive administrative costs, focus on capital export). Shown is the “pro-crisis” nature of the financial sector in Russia (1– 2 crises in 10–15 years). The complete correspondence of the parameters of the financial sector of Russia to other developing economies is demonstrated (the fourth – seventh dozen countries in terms of financial depth). It is shown that the parameters of financial development, as a rule, are worse than the groups of countries with lower middle income (according to the international classification). The analysis of the Russian economic model made it possible to show the cause-and-effect relationships between it and the financial sector model, their interdependence. Four scenarios of the economic future (“besieged fortress”, “frozen economy”, “Spanish”, “growth economy”) are given, with estimates of their probability, and on this basis the corresponding scenarios for the future development of the Russian financial sector. The scenario of the “growth economy” based on the change in the model of the economy in Russia, the policy of “financial afterburner” and the formation of a new model of the financial sector in Russia is more fully disclosed.

Business-groups in Russian industries

2004 ◽  
pp. 121-134 ◽  
Author(s):  
S. Avdasheva
Keyword(s):  
Industrial Organization ◽  
Economic System ◽  
Institutional Economics ◽  
Business Groups ◽  
Control Rights ◽  
Organization And Management ◽  
Russian Economy ◽  
Main Determinants ◽  
Soviet Economic System

The chapter of “Institutional Economics” textbook is devoted to the development of business-groups as a specific feature of industrial organization in the Russian economy. The main determinants of forming and functioning of business-groups such as allocation of property rights in Soviet enterprises, networks of directors and executive authorities in the Soviet economic system as well as import of new institutes and inefficient state enforcement are in the center of analysis. Origins, structure, organization and management within the groups and the role of shareholding and informal control rights are considered.

The Problem of Identifying and Modeling the Relationship between Monetary Factor and Inflation in the Russian Economy

2008 ◽  
pp. 61-76
Author(s):  
A. Porshakov ◽  
A. Ponomarenko
Keyword(s):  
Money Supply ◽  
Money Demand ◽  
Russian Economy ◽  
Long Run ◽  
Complex Approach ◽  
Wide Range ◽  
Long Time ◽  
The Relationship ◽  
Supply Side Factors

The role of monetary factor in generating inflationary processes in Russia has stimulated various debates in social and scientific circles for a relatively long time. The authors show that identification of the specificity of relationship between money and inflation requires a complex approach based on statistical modeling and involving a wide range of indicators relevant for the price changes in the economy. As a result a model of inflation for Russia implying the decomposition of inflation dynamics into demand-side and supply-side factors is suggested. The main conclusion drawn is that during the recent years the volume of inflationary pressures in the Russian economy has been determined by the deviation of money supply from money demand, rather than by money supply alone. At the same time, monetary factor has a long-run spread over time impact on inflation.

How to Assure Stable Development in Unstable Financial Environment?

2007 ◽  
pp. 4-26 ◽  
Author(s):  
M. Ershov
Keyword(s):  
Stock Market ◽  
Developed Countries ◽  
Market Liquidity ◽  
Market Mechanisms ◽  
Russian Economy ◽  
The Developed Countries ◽  
Russian Stock Market ◽  
Stable Development ◽  
Financial Environment

Growing involvement of Russian economy in international economic sphere increases the role of external risks. Financial problems which the developed countries are encountered with today result in volatility of Russian stock market, liquidity problems for banks, unstable prices. These factors in total may put longer-term prospects of economic growth in jeopardy. Monetary, foreign exchange and stock market mechanisms become the centerpiece of economic policy approaches which should provide for stable development in the shaky environment.

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