Russia's Regions: Income Volatility, Labor Mobility and Fiscal Policy
September 1, 2005
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Summary
Russia's regions are heavily exposed to regional income shocks because of an uneven distribution of natural resources and a Soviet legacy of heavily skewed regional specialization. Also, Russia has a limited mobility of labor and lacks fiscal instruments to deal with regional shocks. We assess how these features influence the magnitude and persistence of regional income shocks, through a panel vector autoregression, drawing on extensive and unique regional data covering last decade. We find that labor mobility associated with regional shocks is far lower than in the United States yet higher than in the EU-15, and that regional expenditures tend to expand in booms and contract in recessions. We discuss institutional factors behind these outcomes and policy implications.
Subject: Commodities, Fiscal policy, Income shocks, Labor, Labor mobility, National accounts, Oil, Personal income
Keywords: countercyclical fiscal policy, Europe, fiscal policy, income, income growth, Income shocks, income volatility, labor mobility, Oil, panel VAR, Personal income, revenue, revenue windfall, Russia, Russia's region, WP
Pages:
19
Volume:
2005
DOI:
Issue:
185
Series:
Working Paper No. 2005/185
Stock No:
WPIEA2005185
ISBN:
9781451862041
ISSN:
1018-5941
