Russia's Regions: Income Volatility, Labor Mobility and Fiscal Policy

Author/Editor:

Goohoon Kwon ; Antonio Spilimbergo

Publication Date:

September 1, 2005

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

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.

Series:

Working Paper No. 2005/185

Subject:

Commodities Fiscal policy Income shocks Labor Labor mobility National accounts Oil Personal income

English

Publication Date:

September 1, 2005

ISBN/ISSN:

9781451862041/1018-5941

Stock No:

WPIEA2005185

Pages:

19

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