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Archive / 2011

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No 1

Economic policy


Methodological Approach to Evaluating Intergovernmental Relations in the Russian Federation
In Russia the regional level of government obtains the vast authorities to regulate the interbudget relations on subnational level. The efficiency of municipal level of government largely depends on the regional governments’ decisions. So it’s very important to formulate quantitative and qualitative indicators to estimate the efficiency of interbudget relations on subnational level. We propose the methodological approaches to estimate the efficiency of interbudget relations on subnational level in the context of financial autonomy, fiscal equity and sufficiency of municipal financial resources to supply the needs of the local communities.
Key words: interbudget relations, municipal level of government, financial autonomy.

Anton Siluanov, Cand. Sci. (Econ.), Deputy Minister of Finance of the Russian Federation
(9, Ilyinka ul., Moscow, 109097, Russian Federation)
Irina Starodubrovskaya, Cand. Sci. (Econ.), Center for Political Economy and Regional Development,
Gaidar Institute for Economic Policy (5, Gazetny per., Moscow, 125993, Russian Federation).
Vladimir Nazarov, Cand. Sci. (Econ.), Gaidar Institute for Economic Policy
(5, Gazetny per., Moscow, 125993, Russian Federation).


The Other Countries’ Experience: Something to Learn
The recent global economic crisis was synchronized in many countries. That allows to compare ways and means used by different governments to solve similar problems. For comparison we choose three countries: the USA, the UK and China. Our analysis allows to crystallize those moments that differ Russia from other countries in elaboration and realization of anti-crisis measures. In the first part of the paper the authors propose that for the US authorities the recent crisis was unexpected that enforced them to make decisions having no full information. For today though the overall efficiency of the US anti-crisis measures was rather high two key problems are not solved yet — the housing market is depressed and unemployment is too high. That means the recovery of the US economy is not fully sustainable. The main events of the crisis are described as well as the development of the anti-crisis monetary and fiscal measures with the emphasize of the analysis concentrated on the banking system that became the weakest sector of the British economy. Estimating the nature and effectiveness of the anti-crisis policy in the UK allows to understand better the peculiarities of the crisis developments in other countries as well as to assess the relevance and the efficiency of their stabilization efforts.
Key words: financial crisis, global economic crisis, anti-crisis policy.

Sergei Aleksashenko, Cand. Sci. (Econ.), senior research fellow, director for macroeconomic research.
Dmitry Miroshnichenko, research fellow.
Sergei Smirnov,  Cand. Sci. (Econ.), deputy director.
Andrei Chernyavsky, Cand. Sci. (Econ.), senior research fellow.

Development Center, National Research University — Higher School of Economics 
(4 bldg 2, Slavyanskaya Ploshchad, Moscow, 103074, Russian Federation).


The Well-being of the Population in Pre-Revolutionary Russia (On the Book of B. Mironov
“The Well-being of the Population and Revolution in Imperial Russia”)
Author of the review highly appreciates the work as a whole giving the creative analysis of the monograph implications. He shared major findings that, firstly, there are no proper grounds for approval of a permanent decline in living standards of the general population of Imperial Russia. Secondly, he agrees that this thesis isn’t the only one that had caused revolutionary events in Russia in the early twentieth century.
Key words: Russia, population, living standards, history.

Gennady Bogomazov, Dr. Sci. (Econ.), Faculty of Economy, St. Petersburg State University
(62, Tchaikovskogo ul., St. Petersburg, 191123, Russian Federation).

Nobel Laureates in Economics

Job Creation and Job Destruction in the Theory of Unemployment
In this paper a job-specific shock process in the matching model of unemployment with non-cooperative wage behaviour is modeled. The authors obtain endogenous job creation and job destruction processes and study their properties. They show that an aggregate shock induces negative correlation between job creation and job destruction whereas a dispersion shock induces positive correlation. The job destruction process is shown to have more volatile dynamics than the job creation process. In simulations the authors show that an aggregate shock process proxies reasonably well the cyclical behaviour of job creation and job destruction in the United States.
Key words: job creation, job destruction, unemployment, vacancies.

Dale T. Mortensen, Northwestern University (Chicago, USA).
Christopher A. Pissarides, London School of Economics (UK).

Competition Policy

Geoffrey A. MANNE, Joshua D. WRIGHT
Innovation and the Limits of Antitrust (The Ending)
Frank Easterbrook’s seminal analysis of error-cost minimization in «The Limits of Antitrust» has special relevance to antitrust intervention in markets where innovation is a critical dimension of competition. The authors discuss some principles for applying Easterbrook’s error-cost framework to innovation. Then they discuss the historical relationship between antitrust error and innovation. They conclude by challenging the conventional wisdom that the error-cost approach implies that the rule of reason, rather than per se rules, should apply to most forms of business conduct. Instead one must identify simple filters to harness existing economic knowledge to design simple rules that minimize error costs.
Key words: antitrust, law and economics, monopolization, rule of reason.

Geoffrey A. Manne, International Center for Law and Economics (ICLE), Lewis & Clark Law School (USA).
Joshua D. Wright, International Center for Law and Economics (ICLE), George Mason University School of Law,
Discussing the Paper by F.  Easterbrook (Round Table Discussion)
Two Pairs of Concepts
The article discusses the change in the views of American economists, jurists and enforcers in the process of competition. Having taken over time perspective on what the competition is a dynamic and powerful process, they concluded that the need to mitigate antitrust laws.
Key words: antitrust, law and economics, competition.

Donald Boudreaux, Ph.D., Center for Study of Public Choice, George Mason University (USA).

Limits to Combat the Exploitation
The article discusses the applicability to Russia the conclusions of the article by Frank Easterbrook, «The Limits of Antitrust». The author argues that a substantial degree of the Russian antimonopoly legislation is aimed at ensuring the fairness of economic exchange and offers a modification of the Easterbrook’s approach that takes into account this feature.
Key words: antitrust, law and economics, economic exchange.

Vadim Novikov, senior research fellow, Russian Presidential Academy of National Economy
and Public Administration (82, prosp. Vernadskogo, Moscow, 119571, Russian Federation).

Coordination and Distribution Effects of I and II Types of Errors
It was demonstrated how costs of rights enforcement and redress, as well as errors types I and II regarding rules enforcement influence on equilibrium properties and benefits distribution among game participants, including third-party enforcer. It was presented how discrimination on the side of external enforcer influences on game participants strategy choice and game results in terms of equilibrium and benefits distribution.
Key words: antitrust, law and economics, errors types I and II, external enforcer.

Andrei Shastitko,  Dr. Sci. (Econ.), professor, Economic Faculty, Lomonosov Moscow State University (1 bldg. 46, Leninskiye Gory, Moscow, 119991, Russian Federation);
Foundation “Bureau of Economic Analysis”
(27 bldg. 3, Zubobsky boulevard,  Moscow, 119021, Russian Federation).

Antitrust, Legislation Clearness and Judicial Precedent
The article examines judicial precedent as a means to improve the predictability of antitrust regulation. The author concludes that this remedy is not effective enough because of the uncertainty inherent to this regulation.
Key words: antitrust, law and economics, uncertainty.

Alexander Vereshchagin, Doctor of Law, Master of Laws (Pallas LLM in European Business Law), University of Essex (UK).

Lack of Market Power as a Condition of Exemption from Antitrust Prosecution
The article examines the proposed F. Easterbrook criterion according to which no firm has market power (understood as the ability to raise prices without further reducing the profit) — a sufficient condition, so as not to entertain antitrust suits against this company. The theoretical and practical problems of application of this criterion, proposed an alternative.
Key words: antitrust, law and economics, market power.

Valery Kizilov, research fellow, National Research University — Higher School of Economics
(20, Myasnitskaya ul., Moscow, 101000, Russian Federation).


Russia on the Path of Modernization

Political Modernization: Strategies and Instruments of Realization
The central theme of the article is the comparative analyses of the Russian Government and its political opposition modernization strategies. Analyzing the economic modernization mechanisms the author makes the conclusion of the impossibility of the successful economic modernization without political modernization, formulates urgent goals for political opposition, the achievement of these goals helps to create the important conditions of democratic reforms. The author makes the attempt to appreciate the effectiveness of the main opposite party’s strategies and instruments of their struggle for democratization.
Key words: political modernization, economic modernization, political opposition, democratic reforms.

Andrey Olshtynsky, Cand. Sci. (Econ.), Moscow Academy of Finance and Law 
(17A, bldg. 6, Bolshaya Cheryomushkinskaya ul., Moscow, 117447, Russian Federation).
Innovation and Catch-Up Development: Two Modernization Strategies for the Russian
Knowledge Economy
Based on institutional and evolutionary approaches and with reference to historical experience of the Russian modernizations the author of the paper examines alternative options for the development of the Russian knowledge economy in the current situation of global postindustrial challenges and the country’s industrial underdevelopment. The author argues that following the catch-up modernization model is more likely to take effect in the near future whereas opportunities exist for basically innovation development that can become a reality in the long-run.
Key words: knowledge production, innovations, catch-up development, human capital, technological structures, social and economic institutions.

Dmitry Didenko, Cand. Sci. (History), research fellow, Institute of Sociology of the Russian Academy of Sciences
(24/35 bldg. 5,  Krzyzanowskogo ul., Moscow, 117218, Russian Federation).
India and China: Two Scenarios of Modernization
Diasporas of Indian and Chinese immigrants in the U.S. influences on the international politics of their home countries and on the policies of the U.S. The degree of this latter effect depends on the level of bilateral relations between the U.S. and the country of origin. Concrete displays of this influence are largely determined by the phase of political, economic, social and cultural development, which both partners of this interaction are considered, as well as features of the mentality of a particular ethnic group.
Key words: modernization, India, China, migration.

Timur Valeev, graduate student, National Institute of Business
(5/1, Yunosti ul., Moscow, 111395, Russian Federation)


Analytics and Forecast

Budget Expenditures Effectiveness in Russia
The implemented anti-crisis fiscal package and reduction of the budget expenditures projected in 2011-2013 raise a question on the consequences of those measures for the Russian economy. Estimating fiscal multipliers of the enlarged budget this paper represents a pioneering research on effectiveness of fiscal policy in Russia. The Russian fiscal policy appeared to be quite ineffective in last 11 years: an increase in expenditures of the enlarged budget by 100 roubles transformed into an increase in GDP by only 13 roubles (in constant prices). The crisis enhanced the effectiveness of government expenditures almost twofold. The most effective are expenditures on such budget items as national economy, housing and utilities infrastructure and ecology (the respective multiplier equals 0.55). The reduction of the budget expenditures on these particular items projected in 2011-2013 may slow GDP growth.
Key words: budget policy, fiscal multiplier, budget deficit, financial crisis.

Nadezhda Ivanova, head of department.
Maria Kamenskikhsenior analyst.

Center for Macroeconomic Research of Sberbank (19, Vavilova ul., Moscow, 117997, Russian Federation)
Forecasting in Russia: An Overview of the Basic Models
This paper considers the main models using for macroeconomic forecasting in Russian Federation. Such models as models of the CEMI RSSI, the IEF RSSI, Gaidar Institute for Economic Policy, EEG, Sberbank of Russia, and others are considered. It is shown that econometric models are the main forecasting method.
Key words: forecasting, modeling, econometrics.

Marina Turuntseva, senior research fellow, Gaidar Institute for Economic Policy
(5, Gazetny per., Moscow, 125993, Russian Federation).