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2015, Issue 2 (26). Abstracts
Beyond Classical Rationality: Two-Stage Rationalization Numerous facts indicate that behaviour (choice) of economic agents does not satisfy strong criterions of rationality. One of the possible explanation is in that the choice goes in two (or more) sequential stages. In the first stage, one chooses a subset F(A) from an initial menu A. Then the best element (with respert to some linear order) is chosen from F(A) . The resulting choice is not rational in the classical sense. However it possesses some specific properties which distinguish it from arbitrary non-rational behaviour. In the paper we give a survey of recent works on two-stage choice. Axiomatic characteristics of such a choice are given depending on rationality conditions of the first step choice. Key words: choice function, axioms of heredity, outcast, and concordance, filter, preferences, axiom of revealed preference, Plott function
Distribution of Entrepreneurial Skills and Migration: Employment Structure, Income Inequality, and Welfare The authors define a general equilibrium model with heterogeneous individuals who are endowed with identical preferences, given by the utility function with constant elasticity of substitution (CES), and with heterogeneous entrepreneurial skills. We find that scale effects linked to migration can be analyzed within the framework of the constructed model because the migration changes the market size together with a market structure. A population growth due to immigration of lowqualified individuals ambiguously affects the share of reciprocal to entrepreneurial and the inequality in the economy. If the distribution of the inverse entrepreneurial skills has an increasing (decreasing, constant) elasticity, then decreases (increases, and does not change) and the Gini coefficient increases (decreases and does not change). Key words: monopolistic competition, heterogeneous consumers, entrepreneurship, migration, income inequality, welfare
Optimization of Simple Monetary Policy Rules on the Base of Estimated DSGE-model Optimization of coefficients in monetary policy rules is performed on the base of the DSGE-model with two independent monetary policy instruments estimated on the Russian data. It was found that welfare maximizing policy rules lead to inadequate result and pro-cyclical monetary policy. Optimal coefficients in Taylor rule and exchange rate rule allow to decrease volatility estimated on Russian data of 2001–2012 by about 20%. The degree of exchange rate flexibility parameter was found to be lower than its current value. It means that Bank of Russia has to systematically smooth exchange rate dynamics when it will adopt inflation targeting in 2015. Key words: exchange rate rule, optimal monetary policy rules, DSGE, intermediate exchange rate regime, inflation targeting, Russia
The Assessment of Default Probability for the Project Finance Transactions The article reviewed approaches to the development of internal rating models in project finance. Empirical research was based on the collected sample of data on various investment projects, including financial, industrial and regional indicators. The model estimating the probability of default for the project finance transactions (within the framework of internal ratings based (IRB) approach) and using an econometric model of binary choice was developed. On the basis of the developed model the decision making algorithm on project participation was formulated. New results of this research lies in the use of Russian statistics when adapting the proposed approach for project finance transactions. Key words: default, logistic regression, normalization, discriminatory power
Managerial Paradoxes of Reform in Russian University Sector The article discusses the complex of anomalous effects that were the result of failed reforms in the higher education of Russia. The author showed the paradoxes that arose in the process of introducing the unified state exam, systems of testing and distance learning, state standards and regulations in terms of research, publications and citations. It was shown a devastating effect on universities from inadequate policy for the appointment of rectors and their remuneration. The paper discusses the problems of escalated confrontation between the administrative staff of universities and professors, addressing the challenges of availability of education and syndrome of shifting the responsibility from top down. The discussed effects are accompanied by stylized examples. Key words: institutions, reforms, higher education, state regulation
Job-Related Training on Russian Enterprises An effective system of personnel training is one of the most important factors of companies' growth and development of the whole economy, especially in times of rapid technological progress. This study is aimed to analyze the factors affecting the companies' stimulus to invest in the employees' human capital in Russia. Logistic regressions to determine the effects using data from Russian firms in 2011 are applied in the study. The study shows that innovative activity of the enterprise, a high proportion of workers with higher education, and an active employment policy have a positive effect on the probability of the availability of training programs in the enterprise. Key words: labour economics, job-related training, investment in human capital
Economic Strategy for the Peripheral System Russian economic system is considered as a peripheral capitalist economy. For this type of economy the concept of "economic strategy" does not seem applicable, since the system itself rigidly defines the logic of development. It determines such features of Russia's economy as a large role of export of mineral resources, dependence on external financial markets and on foreign investments as the source of new technologies; government and business interweaving; financial flows configured by rent income extraction through administration and corruption. With lacking civil society, weak institutions and subordinated position within the world economy the system can be transformed only through conscious efforts of authorities. However political regime which evolved in the country – peripheral autocracy – makes only more conspicuous the lack of political will to reform the system. So a scenario of Russia implementing the strategy of breaking through the limitations of the peripheral area of world capitalism is postponed for an indefinite period of time. Key words: peripheral capitalism, economic growth, reform, political regime, modernization, economic development strategy, relations with the West
Government Stimulus or Economic Incentives? The authors demonstrate that the recent performance of Russian economy is lagging far behind both targets set by the government and performance of the global economy. Arguments are suggested that possible effects of monetary and fiscal stimulus suggested by some economists most likely will turn to be negative in a medium run. The major macroeconomic and institutional impediments to growth are outlined and policies required to address these obstacles are indicated. The latter include measures to restore macro sustainability, to resolve structural problems, and improving public institutions. Institutional progress requires denationalization (not only in terms of ownership, but also in functional terms, as many mixed and private-owned banks and companies in fact serve as governments' agents), property rights protection, and alleviating excessive regulatory burden on business. Key words: Russian economy, long-term development, economic stimulus
The Economic Crisis in Russia: Causes, Deployment Mechanisms, and the Possible Consequences The current economic crisis in Russia has been caused by a combination of situational and "systemic" factors. The former group of factors includes (inter alia) a fall in international oil prices; the political revolution in Ukraine; a decrease of public trust in political power institutions in 2008-2014; and a low quality analytical support of political decision-making process. The most important "systemic" factors are a traditional dependence of Russia on raw materials' export and the crisis of national identity. The long-term effect of the crisis will be a narrowing of the spectrum of positions that Russia could take in the world economic and political system. Before the crisis, the spectrum of options was limited by a position of regional power (at best) and a position of emerging state/country with an uncertain status, survived in or experiencing a de jure or de facto territorial disintegration. As a result of the crisis the best possible option seems to be a position of a country at the periphery of the developed world deprived of any decisive influence on the politics of its neighbors. Key words: Russia, economy, crisis, resources, national identity, Ukraine
Russian Way out of the Crisis: Originality Versus Universal Trend The article analyzes the results of the systemic transformation of the economy of the Russian Federation (the RF), assessment of the balance of the positive and negative results of Russian reforms and the current government's economic policy is given. The alternative options of economic policy are offered with the aim of bringing the country to the path of sustainable development. Key words: models of economic policy, neoliberalism, shock reforms of the 1990's, market reforms in Central and Eastern Europe, new model of state regulation, exchange rate of the ruble, economic growth
Sudden Turn The article reveals the main constraints to the economic development and growth in Russia, stemming from the current economic model, the nature of the financial system, and the existing global risks and conflicts. The basic scenarios according to which the macroeconomic situation in Russia will develop are given. The probability of possible scenarios is estimated, taking into account the standards of social behaviour and the traditional cultural values. We discuss in detail the strategy of "sudden turn", based on a pragmatic liberalism, the principles of developmental economics and the experiences of countries that have achieved the economic miracle after World War II. Moreover, the article discloses the components of macroeconomic policy that might lead Russia to the path of outrunning economic growth and "catching up" modernization. In particular, it shows the key elements of monetary, interest rate, exchange rate, fiscal, tax, investment, price, and capital account policies, as well as policies in the fields of ownership and anti-monopoly regulation. Key words: economic reality, scenario, catching up modernization, economic miracle, developmental state, pragmatic liberalism, developmental finance
Long-term Development: from a System of Challenges Towards Policy Determinants We outline several internal and external challenges for Russian long-term development. We argue that those challenges are potent to exhaust competitive advantages of Russian economy and to lead to long-term stagnation. Low economic growth will hamper development at the areas of welfare, infrastructure modernization, will prevent creating the potential for the future and defense capabilities. This situation calls for a new economic policy framework, which should be designed on the basis of dialogue with business and external actors and provide for own long-term agenda and responsibilities. The new industrialization could stand at the core of such an agenda. Key words: long-term development, challenges, role of the government, economic growth
On the Resource Curse and its Effect on Tactics and Strategy of Economic Development The article calls into question the adequacy of linking the major setbacks in the functioning of Russian economy to the so-called "resource curse". The author acknowledges that an increase in foreign exchange inflow as a result of opening a new deposit of natural resources does create some problems described by the classical "Dutch disease" model. But the inflow of foreign exchange, on the one hand, has a transitory nature and, on the other, cannot devalue the benefits resulting from the increased income. However, an economy with traditionally high share of primary industries is confronted with a problem of different nature – that of an increased volatility of world prices for its exports and, as a result, of the country's income. For such countries it is important to elaborate the efficient mechanism of natural rent collection and to manifest cautious approach to adoption of permanent budget commitments. The author argues that it could be useful in terms of improving the sustainability of the Russian economy and strengthening its competitive position to set up large national reserves of oil. He also defends a position that a country with a significant share of primary sector in its economy should adhere to the regime of "dirty float" of the national currency and pay attention in its monetary policy implementation to several indicators (along with inflation – to exchange rate and interest rates) and to be ready to promptly impose foreign exchange restrictions on capital transactions in case of emergency. The author attracts attention to the significant importance, which the formation of an effective mechanism for the use of rental income has for solving the strategic problem of modernization of the Russian economy. Key words: fiscal policy, foreign exchange regime, Dutch disease, monetary and credit policy, oil dependency, natural rent, resource curse, insurance stocks
Lessons from Modern Crisis for Economic Development in Russia Weak consistency between monetary, exchange rate, fiscal and structural policies is one of the key obstacles to economic growth in Russia. It particularly manifests itself during periods of crises. Since 2013 the Russian economy has been facing a strong slowdown and stagnation, and this was attributable not only to structural factors, but also to restrictive monetary and fiscal policies. Economic recovery and returning to the average world economy’s growth pace calls for a significant easing of monetary policy. Structural reforms must be accompanied by a policy of exchange rate targeting and establishing a new budget rule. Key words: crisis, structural impediment for growth, inflation and exchange rate targeting, budget rule
Financial Crisis 2014–2015 The article provides the analysis of internal and external economic factors of the priorities' choice of the Russian authorities and Russian Central Bank (CBR) anti-crisis measures. It considers the financial crisis period of 2014–2015. The comparative study of the typical descriptions of each Russian crisis, as well as their common nature are under special analysis. Financial and economic crises became the regular phenomenon of Russian economy during last two decades. The development of the system of anti-crisis measures in Russia is typical for present global economy. It includes the nonconventional monetary policy instruments of the central banks. Simultaneously the author researches the role of so-called "Manual Control" practice as a national synonym for "dirigisme policy". The target of that approach is to resolve the national financial system problems. It aims for the financial challenges in general and the banking system in particular. The methods of investment process stimulation in Russian economy are under consideration. Key words: financial policy, economic policy, monetary policy, federal budget, banking sector, financial crisis, internal and external factor of crisis, public–private partnership, investments
Spatial Strategy after the Crisis: from the Big Projects to Institutional Modernization The article is focused on the institutional barriers of Russia's territorial development and their strengthening in the new crisis conditions. These barriers are inter-budgetary relations destimulating regional development, poor investment climate and ineffective state investments, dependence of regional households incomes on unstable resource rent, uncompetitive structure of many regions' economies and low territorial mobility of population. The strategic priorities of territorial development are discussed as well as the state regional policy transformation. Key words: spatial development, Russia's regions
Russia in World Economy: Current Status and Development Trends This paper is devoted to the analysis of the recently published results of International Comparisons Program (ICP) from the point of view of Russia's positions in world economy. The new data about real world GDP calculated on the basis of Purchasing Power Parities (PPP) has been discussed. The authors also presented their own calculations and forecast estimations for long-term economic growth trend. The main result of this program is connected with the bigger role of developing countries in world economy, the new G7. The rate of economic growth for Russia up to 2020, according to our estimations, will be lower than the average for developing countries and for the world economy as a whole. Russia’s share in world economy will be decreasing. Key words: international economic comparisons, purchasing power parities, world economy structure and dynamics, economic forecasts
On the Formation of National Planning System in Russia We propose to distinguish between two "ideal" types of national planning: the universal and the program planning. The first is aimed at accelerating the balanced development of industries and regions through large-scale investment projects; it requires a hierarchy of specialized planning institutions. The second uses a relatively small number of programs aimed at addressing key economic problems. These programs are worked out by the ministries and agencies, which are also engaged in the current management. In developing countries, national planning tends to be the first type, and in the developed ones, it tends to be the second. In Russia, elements of both types of systems have spontaneously arisen. From them, it is necessary to form a mixed system that would be adequate to the Russian level of development. Its contours are discussed in the paper. Key words: indicative planning, budgeting, industrial policy, national innovation system
On the Possibility of Transition to an Economic Strategy Based on the Specifics of Human Capital in Russia Negative economic dynamics, characterized by slowing down of economic development, can be caused also by deeper foundations in path-dependence problem, i.e. keeping the country on a low path of economic development, as a result of the impact of cultural factors (informal institutions) and strictly institutional factors, which are combined in different versions of the social contract. Overcoming this situation implies not only a change at the appropriate levels of institutions and culture, but also the transition to a different economic development strategy. Now mineral resources are treated as the main resource of the global competitive positioning of Russia. However, a high-quality human capital with specific socio-cultural characteristics can become this potential resource of global positioning. The shift of the focus on the new base - human capital resources - requires a different institutional environment (inclusive rather than extractive institutions) and assumes a different structure of economic activity and the sequence of modernizing reforms. The article prompted the author's understanding of prerequisites and contours of such changes. Key words: human capital, inclusive and extractive institutions, cultural capital
The Russian Labour Market Model: Trial by Recession Non-standard way of labour market adjustment that evolved in Russia in the 1990-es was dubbed "the Russian Model" by some observers. Its main feature is domination of price adjustment to shocks over quantity adjustment. Saying that differently, this is the peculiar combination of wage flexibility and employment rigidity. Downward wage flexibility allows absorbing negative shocks, thus protecting employment. Positive shocks lead to large wage growth but add little to employment. This adjustment model is based on a peculiar mix of labour market institutions. This type of adjustment was at work during the 1990-es and 2000-s, though less distinctly during the crisis of 2008–2009. In this article we question how the Russian labour market is likely to react to the current crisis. Will we face strong contraction of jobs and consequent rise in unemployment, or will pay again by our earnings but thus saving jobs? Key words: unemployment, labor market, recession, Russia
Model of Social Policy in the New Economic Conditions (Basic Principles) New model of social policy requires the specification of the basic characteristics and principles of changes in management and economics. This thing is not only relevant, but also there is a need for comprehensive solution for the system, including ideology, law, organization, funding, staffing. Finally, it is also important to highlight the main objective, which can be grasped to pull out the whole chain of processes. Now the most important thing is the honest definition of imbalances, problems and ways to improve governance, decentralization, privatization, new forms of public participation in the financing of social services. The danger here lies in the outer intelligibility of social policy, as every citizen is both its object and participant: he derives income, pension, pays the rent, buys goods, uses the services of education and culture. In fact, decision-making requires scientific knowledge, acquaintance with the experience, the ability to measure the impacts. Key words: social policy, public-social partnership, social management
Health and Welfare: in Search of Balance of Interests Almost all the Russian social systems are in a state of chronic crisis. This is reflected primarily in their critically low efficiency, which can be defined as the degree of implementation of the public interest. The article analyzes the current state of the process of formation of public interest and the results of this process on the example of two key social sectors (health and social security). The author concludes that the government continues a policy of gradual withdrawal from these sectors that have been emerging in recent years, shifting more and more responsibility on the population itself, which is directly (and not indirectly via taxes) pay for health care and social services. The directions of necessary changes to prevent negative consequences of such a course are offered. Key words: health, welfare, public interest, balance of interests
Economic Crisis and the New Paradigm of Public Support of the Patronized Goods In this paper, we propose a new model of economic regulation of the patronized goods in the humanitarian sector of the economy, aimed at increasing the sustainability of the financial position of organizations of culture, science, and education and at reduction of their dependence on conjunctural, or opportunistic, decisions of the economic departments. The basis of this model is composed of three mechanisms of public support: 1) a system of financial performance standards that characterizes a minimum share of budget expenditures on the production of the appropriate types of patronized goods, reflecting state commitments to their accessibility for the population and the remuneration of labor of workers of culture, science and education; 2) the institution of individual budget appropriations which implements the right of citizens’ participation in the selection of areas, or directions of spending a limited part of state income tax; 3) a system of endowment funds, allowing to accumulate receipts from the individual budget appropriations and labeled taxes, in order to extract the increasing investment income from the target capital, or the endowment, which is an additional source of financial support for the patronized goods in the humanitarian sector of the economy. Key words: patronized goods, public support, budgetary regulations, the institution of individual budget appropriations, endowment funds, labeled taxes Back | ||
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