Open AccessEstimates Of Russia’s Potential Output
Author(s) -
Petr Maleček,
Martin Janíčko,
Pavel Janíčko
Publication year - 2021
Publication title -
ekonomika
Language(s) - English
Resource type - Journals
eISSN - 2424-6166
pISSN - 1392-1258
DOI - 10.15388/ekon.2021.100.2.4
Subject(s) - output gap , potential output , context (archaeology) , economics , hodrick–prescott filter , sanctions , production (economics) , kalman filter , pace , investment (military) , econometrics , macroeconomics , business cycle , geography , political science , interest rate , monetary policy , statistics , mathematics , archaeology , geodesy , politics , law
Taking into consideration the specifics of the Russian economy such as dependency on oil and gas drilling & production, and including the current context of the Western sanctions, COVID-19 pandemic, as well as somewhat idiosyncratic potential output development, the main aim of this paper is to quantify recent output gap for Russia. We use three mainstream methodologies: the Hodrick-Prescott filter as a benchmark, the Kalman filter to follow, and the Cobb-Douglas production function. The sample time span ranges from 1995Q1 until 2020Q3, while all calculations are performed on quarterly frequencies. The analysis suggests that given low fixed investment ratios, limited R&D spending in non-military sectors, and adverse demographic development, under a “no policy change” scenario there might soon be even more downward pressures on the country’s potential output growth, and the economy may continue increasing only at a snail’s pace even after a possible withdrawal of the Western sanctions and the end of the COVID-19 pandemic.