The Monetary Policy Impact on the Dynamics of Russia’s Real Economy

Abstract

The article examines the influence of monetary policy of the Bank of Russia on the dynamics of real GDP and its components, real wages and employment from 2003 to 2016. Using the Bayesian structural vector autoregression model (BSVAR) with recent dataset, the paper provides the calculation of the extent of changes in the main Russia’s real sector indicators in response to monetary policy, money base and exchange rate shocks. The analysis allows to conclude that monetary policy leads to real variables changes in Russia. The expected contractionary monetary policy of the Central Bank of Russia with higher interest rates had a statistically valid weak negative effect on real indicators.