12–16.01.2015 – Scientific Seminars on General Equilibrium Models

On 12 - 16 January 2015, the International Fiscal Sustainability Department of the Gaidar Institute and the Russian Presidential Academy of National Economy and Public Administration (RANEPA) (headed by Professor of Economics at Boston University Laurence J. Kotlikoff) held a series of scientific seminars at the Gaidar Institute, dedicated to the issues associated with the creation of general equilibrium models.

The seminars were attended by the Department's staff members: Maria Kazakova (Deputy Head of the Department), Andrey Zubarev, Kristina Nesterova, Yevgeny Goriunov.

The computable general equilibrium model (or CGE model) is plotted for six regions/countries, namely the USA, Japan, Europe, China, Asia, and Russia. This approach is applied in modeling the effects, over time, of demographic changes and economic policy on the growth of real wages, interest rates and economic growth indices in these countries/regions.

The purpose of the January scientific seminars was to calibrate the aforesaid simulation model in accordance with several scenarios, including:

• oil price shock (permanent drop of oil price by 50%),

• oil price shock and tax reform,

• oil price shock and pension reform,

• oil price shock and the combination of the above reforms.

The calibration yielded the following results:

• tax reform can be a useful instrument for dealing with oil price shocks – in this case the well-being of each economic agent is increased;

• pension reform turns out to be a less effective measure in terms of mitigating the consequences of an oil price shock – pension reform benefits the generations born over the course of several decades;

• the combination of tax and pension reform is found to be the most effective method in dealing with the consequences of an oil price shock.

The results of our model calibration were presented at Gaidar Forum 2015 by Kristina Nesterova, who delivered a report entitled Simulating Russia's Trouble Transition at the expert roundtable discussion Russia's Economy in a Model of General Economic Equilibrium on 15 January 2015. Besides, Andrey Zubarev submitted a presentation entitled DSGE model for Russian economy. Oil export duty reduction.

It is planned that the CGE-model should also be calibrated to the benchmark data from other regions of the world (Africa, Latin America, Australia, etc.), and that the same approach should be used for simulating different economic policy measures.

In the course of the scientific seminars, a discussion was held with researchers from the Center for Economic Modeling in the Energy Sector and Ecology at the Russian Presidential Academy of National Economy and Public Administration (RANEPA) Oleg Lugovoy (Director of the Center) and Andrey Polbin concerning the preliminary results yielded by the incorporation in the model of an environmental pollution dataset, including the tax instruments that could be applied in order to mitigate the effects of that global problem.