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

Kwon, Goohoon; Spilimbergo, Antonio

doi:10.2139/ssrn.833424

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

IMF Working Paper No. 05/185

19 Pages Posted: 3 Nov 2005

See all articles by Goohoon Kwon

Antonio Spilimbergo

International Monetary Fund (IMF) - Research Department; Centre for Economic Policy Research (CEPR); University of Michigan at Ann Arbor - The William Davidson Institute

There are 3 versions of this paper

Date Written: September 2005

Abstract

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 auto-regression, drawing on extensive and unique regional data covering the last decade. We find that labor mobility associated with regional shocks is far lower than in the U.S. 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.

Keywords: Russia, fiscal policy, panel VAR, labor mobility, adjustment dynamics

JEL Classification: C33, E62, H77, J61, P52

Suggested Citation: Suggested Citation

Kwon, Goohoon and Spilimbergo, Antonio, Russia's Regions: Income Volatility, Labor Mobility and Fiscal Policy (September 2005). IMF Working Paper No. 05/185, Available at SSRN: https://ssrn.com/abstract=833424 or http://dx.doi.org/10.2139/ssrn.833424