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№ 5

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TAX POLICY

Michael V. MISHUSTIN 8-27

Scientific article

 
Abstract

Understanding  the  nature  of  key  macroeconomic  indicators  and  their  behaviordepending on the overall geo-economic background is decisive in the analysis andforecasting of tax revenues. This makes it necessary to conduct a detailed analysis of the factors determinig budget-forming tax revenues. The analysis of the tax revenuesincludes socio-economic, legal and tax administration factors. These factors have adifferential impact on each budget-forming tax — profit tax, value added tax (VAT),mineral extraction tax (MET), personal income tax, excise taxes. The overall negativedynamics of revenues to the consolidated budget of the Russian Federation developed asa result of a serious reduction of MET, which confirms the strong resource dependenceof the Russian economy. An ambiguous effect on the profit tax had the overall growthof the price level, the dynamics of industrial production and foreign trade and the rubleexchange rate. The increase in VAT revenues was achieved as a result of cumulative effectsof inflation growth and increasing trade turnover in real terms. The decisive economicfactor in the dynamics of such type of tax revenues as the excises is the consumer activity,but a major effect on its dynamics had a change in tax rates on excisable goods. Stablegrowth of tax revenues contributes to the Federal Tax Service of Russia measures aimedat combating the use of unfair methods of competition through the use of legislativegaps for tax evasion. FTS radically changed the approaches to the control proceduresto reduce the interaction conflicts with taxpayers. In order to implement and improvethe conciliation procedure FTS continues the development of the new mechanismsfor pre-trial settlement of tax disputes, including tax monitoring. Changes of the pricesituation on the world markets, the weakening of external demand in key energy sources,the national currency devaluation is perceived by the tax authorities as the scenarioconditions of the development of the economy, but the effective tax administrationdemonstrates the ability of budget to withstand financial and economic shocks.

Keywords:  tax  revenues,  budget-forming  taxes,  factor  analysis,  economic  crisis,  taxadministration.

JEL: E60, E62.

Michael V. Mishustin, Dr. Sci. (Econ.),head of the FederalTax Service (23, Neglinnaya ul., Moscow, 127381, Russian Federation).

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Kanat S. ISAKOV, Sergey E.PEKARSKI 28-49

Scientific article

 
Abstract

Modern financial repression in developed countries takes the form of various measuresaimed at increasing the placement of public debt with a below-market or even negativereal rate of return. It provides governments with an additional revenue or liquidates theirdebt. But financial repression is a hidden tax on wealth, which introduce additionaldistortions into the economy and thus affects the base of traditional taxes. In this paperwe introduce financial repression into the neoclassical dynamic general equilibrium model to assess its overall impact on government revenues. Following the framework ofTrabandt and Uhlig (2011) we estimate Laffer curves for USA and the set of Europeancountries. We show, that tighter repression shifts Laffer curves for consumption andlabor-income  taxes  down,  but  actually  increases  the  revenue  from  capital-incometaxation. As a result, and despite a decrease in output, financial repression leads toan increase in government purchases. We also estimate marginal rates of substitutionsbetween different policy instruments and show, that while the U.S. economy cannotloosen repression without forgoing government purchases or increasing traditional taxes,European economies are on the wrong side of the Laffer hill for financial repression thatallows decreasing public debt and increasing its rate of return.

Keywords: financial repression, public debt, distortionary taxation, Laffer curves.

JEL: E62, G28, H21, H24, H31, H63.

Kanat S. Isakov, National Research University Higher School of Economics (20, Myasnitskaya, Moscow, 101000, Russian Federation).                                                                                                                                                                          E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Sergey E. Pekarski, PhD, Cand. Sci.(Econ.), professor, Head of the Department of Theoretical Economics, National Research University Higher School of Economics (20, Myasnitskaya, Moscow, 101000, Russian Federation).     E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 
Arthur B. LAFFER 50-67

Excerpt from the book

 
Abstract

Excise taxes are consumption taxes applied to a specific good, such as alcohol,gasoline,  or  tobacco,  for  example.  Such  taxes  may  be  a  mechanism  to  generaterevenues for the overall government budget, be intended to curb consumption (e.g.,“sin” taxes on alcohol and tobacco), act as an “earmarked tax” to fund a public good(e.g., gasoline taxes often fund road maintenance and repair), or correct for a negativeexternality of consumption (e.g., fat taxes on fatty foods) — or any combination ofthe four.Adam Smith laid the groundwork for taxing consumable goods, with an excise tax onsuch goods seen as the most market­neutral tax — guaranteeing government revenuewithout increasing the natural wage rate of laborers. The premise of this assertion is thatif goods like tobacco, rum, or sugar become too expensive, then consumers can simplycut them out of their budget, as they are not necessities.Over the subsequent centuries, a number of economists have expanded upon Smith’stheories. The additional research, along with years of practical experience, has cemented tobacco as one of the most frequent targets of tax increases, on both public health andpublic finance grounds. While the levying of excise taxes is theoretically substantiatedfor  generating  government  tax  revenues  with  minimum  market  distortions,  as  wellas correcting for externalities, there are numerous theoretical and practical issues toconsider when introducing or increasing excise taxes.Given recent discussions on international tobacco taxation, it remains of interestto  find  a  way  to  objectively  compare  tax  levels  across  countries.  Broadly  threeapproaches exist: comparing tax incidence, expressing taxes as a percentage of theretail consumer price; comparing monetary tax levels, in a common currency perpack of cigarettes; or comparing tax levels taking into account domestic incomelevels. Our study shows that this last approach, which takes into account the domesticaffordability of tobacco products, is the most sensible for public policy benchmarkingpurposes.In general, governments levy excise taxes on tobacco to achieve fiscal and public healthobjectives. In order to evaluate both objectives, it is first necessary to review the elasticityof tobacco demand. From there, fiscal revenue and public health goals are discussed incontext of the Laffer Curve (fiscal) and the Bhagwati Theorems (public health). Othertheoretical concerns, such as affordability, regressivity, illicit trade, and the excise taxstructure are also considered in this book. Of course, no analysis would be completewithout an overview of the practical aspects of excise taxation— each of these topicsare highlighted below.

Keywords: taxation, excise duties, tobacco products, the elasticity of demand.

JEL: H20, H21, H39.

Arthur B. Laffer, PhD, Chairman, Laffer Associates, The Laffer Centerat the Pacific Research Institute (101 Montgomery Str., Suite 1300, San Francisco,CA 94104).                                                                                                                                                                                                         E­mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

SOCIAL ECONOMICS

Alexey D. VERBETSKY, Alla A. FRIEDMAN 68-91

Scientific article

 
Abstract

The  article  models  the  competition  of  high  school  graduates  for  state-financedadmission to the prestigious universities and analyze the impact of admission policydesign  on  students’  choice.  Under  limited  supply,  the  admission  is  based  on  theapplicants’ rating composed on the basis of the Unified State Exam (USE) results, academic olimpics and other achievements. High school graduates allocate their efforts between specific training for standardized tests and learning. The latter is more efficientin terms of human capital building but less efficient in terms of improving exam scores.The cut-off final score is used to balance demand and supply. By changing the weightof non-exam activities in the final score, universities affect the distribution of effort byhigh-school graduates. It is shown that the possibility of training-for-exam increasesstudents’ expected exam scores, but does not change the students ranking and doesnot distort the allocation of students between prestigious universities and other highereducation institutions. It results however in substitution of learning for training thatdeteriorates human capital and worsens the quality of enrolment. The optimal designof admission policy in presence of training-for-exam should place higher weight tothe academic olimpics and other non-exam achievements. At the national level, thefrequent changes in the content and the format of USE tests could be used as a partialremedy.

Keywords: higher education, effort choice, human capital, admission policy.

JEL: I21, I28, J24.

Alexey D. Verbetsky, Deputy director, Center for Public Policy and PublicAdministration, School of Public Policy, Russian Presidential Academy of NationalEconomy and Public Administration (82, Vernadskogo prosp., Moscow, 119571,Russian Federation).                                                                                                                                                           E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Alla A. Friedman, Dr. Sci. (Econ.), professor, National Research UniversityHigher School of Economics (20, Myasnitskaya ul., Moscow, 101000, RussianFederation).                                                                                                            E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 
Vadim V. RADAEV, Zoya V. KOTELNIKOVA 92-117

Scientific article

 
Abstract
This paper focuses on structural changes in alcohol consumption observed in Russia sincethe late 20thcentury. It explores the Soviet structural patterns of alcohol consumptionshaping in the 1960–1980s. Governmental attempts to combat illegal production andsales of homemade distilled spirits (samogon) are overviewed. We analyze how the Soviet  drinking patterns were broken down by two exogenous political and economic shocks andhow the new trends in consumption of manufactured and homemade alcohol emergedin the 2000s. We also discuss an impact of the ongoing anti-alcohol campaign on changesin alcohol consumption. Three complementary data sources are used. They includethe Rosstat official statistics on the level of alcohol consumption, expert statistics onillegal alcohol consumption in the Soviet period, and data on percentage of drinkers ofmain alcoholic beverages collected from the RLMS-HSE nationwide panel survey ofindividuals aged 15+ years in 1994-2015. Both statistical and survey data demonstratesimilar trends. We observe recurrent cycles in consumption of licit and illicit alcohol thatmay move in parallel or in opposite directions in different periods of time. These changesin alcohol consumption are explained by the combined impact of economic and policyfactors that may vary over time. The new trends were interrupted, and new patterns ofalcohol consumption emerged in Russia in the 2010s. These patterns are not sustainableyet. However, they gradually move away from the traditional Northern style of drinking.

Keywords: alcohol consumption, homemade alcohol, alcohol policy, panel studies, Russia.

JEL: P23, P36, Z13.

Vadim V. Radaev, Dr. Sci. (Econ. and Soc.), professor. National Research University Higher School of Economics (20, Myasnitskaya ul.,Moscow, 101000, Russian Federation)                                                                                                              E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it                                                                                                                                                                            Zoya V. Kotelnikova, Cand. Sci. (Soc.). National Research University Higher School of Economics (20, Myasnitskaya ul.,Moscow, 101000, Russian Federation)                                                                                                                                       E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 
Sergey O. KALENDZHYAN, Andrey A. SALNIKOV, Olga V. GUMILEVSKAYA 118-139

Scientific article

 
Abstract

The  article  is  devoted  to  the  problems  of  the  corporate  healthcare  organization  inmajor Russian companies. The role of corporate social responsibility, particularly, inthe healthcare sector has increased considerably in the recent years. In this regard, theissues of developing corporate healthcare management system, which combines the highquality of service and cost-effectiveness, gained particular importance. Analysis of theinternational experience revealed the absence of such notion as “in-house corporatehealthcare”. At the same time, many industrial companies have historically developedtheir own system of medical institutions in Russia. In order to improve corporate healthmanagement, company executives need to make a decision— either to save their ownhealthcare system or to outsource it, which is the common practice in Western countries.The paper analyzes the advantages and disadvantages of using the corporate medicineoutsourcing  in  the  Russian  context.  The  authors  conclude  that,  given  the  currentsituation in the outsourcing market in Russia, risks of transmission of the corporatehealthcare management to third parties exceed the potential benefits. Later in the articlethe comparative analysis of different forms of healthcare management systems is carriedout within the “insourcing” model, in particular, the centralized and decentralizedmanagement.  The  authors  examine  the  best  practices  of  the  corporate  healthcareorganization in such companies as Russian Railways, Gazprom, MMK, NLMK, Alrosa.The findings, presented in the article are the basis for the transformation of healthcaremanagement systems in large industrial companies. An example of this transformationis a comprehensive reform of the corporate healthcare in the “Metalloinvest” company.

Keywords:corporate healthcare, medical organizations management system, outsourcing ofmedical services, medical management company.

JEL: I11, I13, I15, M14.

Sergey O. Kalendzhyan, Dr. Sci. (Econ.), professor, Dean of the Higher School of Business Administration of The Russian Presidential Academy of National Economy and Public Administration under the President of the Russian Federation (82, prosp. Vernadskogo, Moscow, 119571, Russian Federation).
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Andrey A. Salnikov, Cand. Sci. (Med.), Head of Health Protection Department, MC «Metalloinvest» LLC (28, Rublevskoye shosse, Moscow, 121609,Russian Federation).                                                                                                   E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Olga V. Gumilevskaya, Higher School of Business Administration of The Russian Presidential Academy of National Economy and Public Administration under the President of the Russian Federation (82, prosp. Vernadskogo, Moscow, 119571, Russian Federation).                                                                                                                                            E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

ECONOMICS OF BANKING SECTOR

Anastasia S. KANAEVA, Elizaveta I. MARKOVSKAYA
140-161

Scientific article

 
Abstract

The modern market of interbank lending is subjected to strong variations becauseof an unstable internal economic and external political situation in the country. Thenumber of transactions of interbank loans and the number of participants of themarket decreases because of Central Bank internal policy of the inefficient creditorganizations  reduction.  There  is  a  narrowing  of  the  interbank  lending  market,because the counterparties are not sure in each other and there is a mistrust crisis. Thetransition’s difficulties of the Russian banking system to the international standardsBaselIII have a negative impact on the interbank market, as not all credit organizationscan sustain strict requirements of the international standard, which increases thenumber of mergers and acquisitions of credit institutions. Such a trend can lead toincrease of credit risk for the bank lender. The unstable economic situation which isobserved in the permanent fluctuation of the Russian currency, increases the interbanklending’s cost, that in turn restricts the number of participants of the interbank relatedwith the introduction of sanctions against the large Russian corporations actualizethe interbank lending market by the impossibility of cheap credit abroad. Because ofsanctions, corporations are forced to pay attention to the Russian banking sector, andthe interbank loan is an easy way to obtain liquid money. Considering all above listedfactors, it implies the need to create express — techniques to estimate of the contractorin the interbank lending market.The primary goal of this article is to present the results of our research which is aimingto the development of the algorithm of making decision on issuance of credit.

Keywords: assessing the creditworthiness of the counterparty, interbank lending market,credit risk.

JEL: G21.

Anastasia S. Kanaeva, National Research University Higher School of Economics (16, Souyza Pechatnikov ul., St. Petersburg, 190008, Russian Federation)                                                                                                                                      E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Elizaveta I. Markovskaya, Cand. Sci. (Econ.), Associated Professor of the Finance Department, National Research University Higher School of Economics (16, Souyza Pechatnikov ul., St. Petersburg, 190008, Russian Federation).                                                                                                                                                                                              E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

NOBEL LAUREATES

Paul R. KRUGMAN, Vernon L. SMITH, Robert M. SOLOW 162-187

Excerpt from the book

 
Abstract
Alfred Marshall, the founder of modern economics, once described economics as ‘the
study of mankind in the ordinary business of earning a living’. In Economics for the
Curious, 12 Nobel Laureates show that ‘the ordinary business of earning a living’ covers a
wide range of activities, as they take readers on an engaging tour of some of the everyday
issues that can be explored using basic economic principles. Written in the plainest
possible language, Nobel Laureates including Paul Krugman, Robert Solow and Vernon
Smith confront some of the key issues challenging society today — challenges that claim
attention in any phase of the business cycle. The range of topics includes how economic
tools can be used to rebuild nations in the aftermath of a war; financing retirement as
longevity increases; the sustainable use of natural resources and what governments should
really be doing to boost the economy. Economics for the Curious is an accessible but
informative display of the kinds of questions economics can illuminate. It will appeal to
anyone who has an interest in economics and the world around them, and we hope it will
encourage further interest and study in the topic from readers everywhere.

Keywords: depression, recession, economic cycles, real estate market, renewable resources,
nonrenewable resources.
JEL: Е10, N10, Q20, Q32.

Paul R. Krugman, distinguished professor of Economics, City University of New
York, USA.

Vernon L. Smith, professor, Chapman University, Orange, California, USA.

Robert M. Solow, professor emeritus, Massachusetts Institute of Technology, USA.

 

TECHNOLOGICAL REVOLUTION

Peter F. KAZNACHEEV, Regina V. SAMOILOVA, Nikola V. KJURCHINSKI 188-197

Scientific article

 
Abstract

A considerable decline in commodity prices in recent years, primarily oil prices, is the result
of a new equilibrium in the market which, in turn, is a direct consequence of technological
innovations. In such circumstances, those producers which can adapt to lower prices by
reducing costs and increasing efficiency will gain a strong competitive advantage. Until
recently, the main driving force of innovative development of the energy sector had been
the “shale revolution”. The situation is changing rapidly — the oil and gas industry is in
need of new technological solutions that would allow it to weather the storm of lower prices.
Currently, one of the areas where innovation is fastest is artificial intelligence. The article
provides a brief overview of the most widespread method within artificial intelligence —
artificial neural networks and describes their main applications within the oil and gas sector.
In their work the authors distinguish highlight three main applications — interpretation
of geological data, hydrocarbon production (smart fields) and price forecasting. The
use of artificial intelligence can increase efficiency of both geological exploration and
production — it allows to achieve more at a lower cost. Under the new market conditions
formed in the energy and mining sectors it is crucially important to utilise all available
mechanisms to increase efficiency. Following the drop in commodity prices, it has become
of vital for companies to acquire more accurate forecasting methods which would allow to
analyze market developments and improve strategic planning.

Keywords: artificial intelligence, neural networks, commodity industry, oil and gas sector, efficiency.

JEL: C45, L71, O3, Q3, Q4.

Peter F. Kaznacheev, Cand. Sci. (Philos.), Deputy Director for research at the Centre for Resource Economics Director of the Centre for Resource Economics, Russian Presidential Academy of National Economy and Public Administration (82, Vernadskogo prosp., Moscow, 119571, Russian Federation)                                                                                                                                                                                         E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Regina V. Samoilova, Deputy Director for research at the Centre for Resource Economics, Russian Presidential Academy of National Economy and Public Administration (82, Vernadskogo prosp., Moscow, 119571, Russian Federation)                                                                                                                                                                                                 E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Nikola V. Kjurchiski, Russian Presidential Academy of National Economy and Public Administration
(82, Vernadskogo prosp., Moscow, 119571, Russian Federation)                                                                                                                                                                                             E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

ANALYTICS AND FORECAST

Alexander A. FRENKEL, Yakov I. SERGIENKO, Boris V. TICHOMIROV, Ludmila S. ROSHCHINA 198-233

Scientific article

 
Abstract

The article presents the main results of the socio-economic development of Russia
in 2015 and for seven months of 2016. Is given analytical assessment of changes in
macroeconomic indicators for the next three years. The focus is on problematic issues of
development of the real sector of the economy, industrial production growth, stimulating
demand for products and services sectors of the national economy, investment activity, development and implementation of the federal budget, the state social services. Matches
dynamics of the Russian economy with the global trends. The ways of overcoming the
backlog in the technological level of production, including by attracting private and
foreign investments, as well as improve the efficiency of capital investments and export
of high-tech products as a key factor for sustainable economic growth. The reasons of
the fall of non-financial institutions in lending and growth of the population of debts
to banks for loans. Noted deficiencies of the current management system of socioeconomic
development, especially budgeting and forecasting. Measures to overcome
the negative phenomena that impede the exit of the deep structural crisis in which the
real sector of economy and social sphere. The estimation of the quality of the anti-crisis
measures to ensure the stable development of the economy, the government forecasts
and budget projections. The results of the impact of international sanctions and the
Russian counter-sanctions, as well as the impact of energy prices, currency appreciation,
inflation expectations in the socio-economic development. To identify important factors
that contribute to the macroeconomic development of the economy. Much attention is
paid to the problems of development and implementation of a strategic planning system.

Keywords: federal budget, public policy, inflation, import substitution, investment activity, innovation.

JEL: E32, O11, P27.

Alexander A. Frenkel, Dr. Sci. (Econ.), professor. Center for macroeconomic analysis and forecasting, Institute of Economy, RAS (32, Nakhimovskiy prosp., Moscow, 117218, Russian Federation)                                                                   E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Yakov I. Sergienko, Dr. Sci. (Econ.), professor. Center for macroeconomic analysis and forecasting, Institute of Economy, RAS
(32, Nakhimovskiy prosp., Moscow, 117218, Russian Federation)                                                                                                E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Boris V. Tichomirov, Cand. Sci. (Econ.). Center for macroeconomic analysis and forecasting, Institute of Economy, RAS
(32, Nakhimovskiy prosp., Moscow, 117218, Russian Federation)                                                                                         E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Ludmila S. Roshchina, Center for macroeconomic analysis and forecasting, Institute of Economy, RAS
(32, Nakhimovskiy prosp., Moscow, 117218, Russian Federation)                                                                                           E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

Reviews

Rouslan Z. KHESTANOV
234-237

Book review

 

Rouslan Z. Khestanov, Dr. Sci. (Philos.), Professor of School of Cultural Studies,
National Research University Higher School of Economics
(20, Myasnitskaya ul., Moscow, 101000, Russian Federation).
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