Fiscal Policy and Regional Output Volatility: Evidence from Russia

Abstract

This paper investigates the relationship between fiscal policy and output volatility in Russian regions between 2000 and 2009. System GMM estimation techniques are used to account for potential endogeneity between output volatility and fiscal developments. Our main finding is that fiscal activism, proxied by various measures of discretionary fiscal policy, contributes to output volatility and so induces macroeconomic instability at the regional level in Russia. This result corroborates previous studies using crosscountry data. To reduce business cycle fluctuations, it would be necessary to curtail pro-cyclical fiscal activism at the regional level, e.g. via fiscal rules and sound institutions of fiscal federalism.

Income inequality and oligarchs in Russian regions: A note

“…Somewhat surprisingly, there is no significant difference between urban and non-urban regions. Oil resources in a region do not have a significant impact on inequality, supporting the previous findings (Eller et al, 2016) that profits from the energy industry in Russia are assigned to the federal budget. Neither do more peripheral regions, as measured by the distance from Moscow, tend to show higher equality than the central regions.…”

“…It is one of the largest and most heterogeneous countries. Its economy is dependent on the performance of a few key industries (Eller et al, 2016), which makes it highly sensitive to sector and region specific income shocks. While there are several cross-country analyses of inequality, so far only few papers have analyzed determinants of regional income inequality.…”

“…As a result, the oligarchic firms are found to operate in all Russian regions except for six units. Finally, we merged the enterprise data with Russian regional data which were taken from Fidrmuc et al (2015) and Eller at al. (2016).…”

The Credibility of Fiscal Rules Policy and Business Cycle Volatility

“…The latter evidence is consistent with the decline of fiscal multipliers observed by Perotti (2005). However, the relationship between government size and volatility is still questionable (Eller et al, 2013). Karras and Song (1996) argue that the correlation changes considerably over time.…”

Temporal and Spatial Dependence of Interregional Risk Sharing: Evidence From Russia

“…Russia is comprised of more than 80 highly heterogeneous regions (oblast). Their heterogeneity makes them particularly interesting for regional analysis [see Eller et al (2016) and Fidrmuc et al (2015)]. However, we have to exclude some regions due to missing data or because they are seriously affected by military conflicts.…”