Modelling Russia's Economy in Transition

This text analyses the economy-wide effects of various trade and economic policies that have affected Russia's transition from plan to market in the past decade. The issues discussed relate to the allocative effects of macro-economic reforms (exchange rate alterations) or reforms in the agro-food sector which have affected Russia's economy in transition. To facilitate the analysis an economy-wide model of Russia's economy is developed. The model is a computable general equilibrium model and as such is the economist's version of a laboratory in which it is possible to conduct policy experiments. Due to the transitory stage of the Russian economy the model is different from other such models for industrialized countries. It takes into account some specific circumstances of the transition process which are elaborated in detail: parts of the informal or hidden economy are represented; market imperfections which are the result of institutional constraints are taken into consideration as are structural rigidities such as immobile capital and disequilibria in labour markets.
The model has a high level of sectoral desegregation and therefore can serve for a wide range of macro-economic and sectoral questions. The model is the first one of its kind for the Russian Federation and is designed to be a tool for the quantitative analysis of economic policies in contemporary Russia. Hence, it could be used as a blueprint for other countries in the Former Soviet Union and should be of interest to academics and policy-makers alike.