Andrei Polbin presented a report at the XXV Yasin (April) International Academic Conference on Economic and Social Development
Andrei Polbin, Head of the Mathematical Modeling of Economic Processes Department at the Gaidar Institute, spoke at the 25th Yasin (April) International Academic Conference on Economic and Social Development. In his report «Analysis of fiscal multipliers for the Russian economy on the basis of
Key conclusions:
- In the context of free capital flow, multipliers higher than one are observed for government spending on final consumption if the increase in government spending is
short-term (1–2 quarters) or if the Central Bank pursues a stimulating monetary policy. - Under the same operating conditions, the multipliers of public investment (assuming that part of it consists of imports) and transfers turn out to be much less than one.
- Under strict restrictions on capital flows, the situation changes dramatically: the values of multipliers for all the considered types of public expenditures when they are increased by one year are in the neighborhood of 1.5, since the increased consumer demand cannot be flexibly satisfied by increasing imports and increasing the deficit (reducing the surplus) of the current account, which intensifies domestic production to meet the increased consumer demand.
- Strong response of GDP to government spending shocks is associated with serious inflationary consequences.
Tuesday, 15.04.2025