Scientific Seminars on Building of General Equilibrium Models

From May 19-24, the International Department of Budget Stability Research -- headed by L. Kotlikoff, Professor of the Boston University – of the Gaidar Institute and the RANEPA carried out a series of scientific seminars on building of general equilibrium models.


The seminars were attended by employees of the department: Maria Kazakova (Deputy Head of the Department), Yevgeny Goryunov, Kristina Nesterova and Anrei Zubarev.

The general equilibrium model is suitable for a number of regions/countries, namely, the USA, Japan, Europe, China, and Asia and permits to understand in what way demographic changes and a fiscal policy in the world may affect growth in real wages and salaries, interest rates and economic growth (both global and regional/domestic) with the course of time.

The goal of the seminars consisted in building and adjustment of the general equilibrium model with Russia included and in future with other parts of the world (Africa, Latin America, Australia and other) taken into account. Also, the issue of inclusion of the environmental component into the model was discussed with Oleg Lugovoi, Head of Research of the RANEPA's Center for Modeling of Power Engineering and Ecology and Andrei Polbin, Researcher of the above Center.

In addition to the above, the participants in the seminars discussed the lines of upgrading the work on evaluation of the long-term budget gap in the Russian Federation with taking into account the update by the Ministry of Economic Development of the forecast of the social and economic development of the Russian Federation, various scenarios of dynamics of both global prices on oil and oil production, the budget strategy of the Russian Federation and other.

Also, Professor L. Kotlikoff delivered a lecture at the Gaidar Institute on Modeling of Cancelation of the profit Tax in the US Within the Frameworks of the General Economic Equilibrium Approach.

As a result of modeling of the reform of the corporate tax in the US within the frameworks of CGE-model with a single commodity, five regions (the US, Europe, Japan, China and India) with skilled and unskilled workforce, as well as demographic and fiscal policies which are specific to each concrete region have received the outputs pointing to the fact that a cancelation of the corporate tax in the US results in fast and sudden growth in the level of the investments, output and real wages in the US, so the shortfall in revenues due to reduction of that tax is largely justified. Slightly lower revenues can be received in case of expansion – which is neutral in terms of revenues – of the tax base, in particular, in reduction of the tax rate to 9% and elimination of tax loopholes.