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Assessing the Impact of Global Hydrocarbon Prices on the Russian Economy Based on the DSGE Model with Capital-Owning Firms

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Abstract—

The article presents the results of research using the DSGE model, which includes such sectors of the economy as real sector enterprises, households, financial intermediaries, and the monetary regulator. In turn, the household sector is represented by groups of savers and borrowers. Financial intermediaries transform temporarily idle funds of households into loans to enterprises of the real sector, and financial wedges can arise in this link preventing the flow of capital. In the manufacturing sector, there are extractive industries for which the production level is set exogenously in order to adequately reflect the impact of the OPEC+ agreement. A feature of the proposed model is a firm-specific capital approach, which assumes that the owners of the fixed capital are the firms that make investment decisions. In our opinion, this little-studied class of DSGE models is more relevant to the Russian realities than traditional general equilibrium models.

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Notes

  1. Formally, we use a nested production function \({{Y}_{{H,t}}} = \min \left\{ {{{A}_{t}}K_{t}^{\alpha }L_{{H,t}}^{{1 - \alpha }};\frac{1}{{ee}}E{{E}_{t}}} \right\}\), where \(E{{E}_{t}}\) is the internal energy consumption, and ee is the energy-output ratio. It is well known that the equilibrium condition for the manufacturer using the production technology with complementary factors (Leontief production function) is the minimum amount of costs for each of the complementary factors of production. That is, the manufacturer’s optimum is \({{Y}_{{H,t}}} = {{A}_{t}}K_{t}^{\alpha }L_{{H,t}}^{{1 - \alpha }} = \frac{1}{{ee}}E{{E}_{t}}\).The first equality is the usual Cobb–Douglas function, a variant of which is represented in deviations by 0. The second equation relates internal (intermediate) consumption of energy resources to production activity in nonextractive branches of the economy.

  2. https://gks.ru/free_doc/new_site/vvp/vvp-god/tab34.htm.

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ACKNOWLEDGMENTS

We are grateful to E. Vikhareva, A. Polbin, A. Votinov, and R. Demikhov for valuable comments and suggestions.

Funding

This work was supported by the Russian Science Foundation, project no. 21-78-10134 (https://rscf.ru/project/21-78-10134/).

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Authors and Affiliations

  1. Russian University of Economics, Moscow, Russia

    V. I. Baluta

  2. Infrastructure Economics Center, Moscow, Russia

    D. N. Shul’ts

  3. Institute of Economic Forecasting, Russian Academy of Sciences, Moscow, Russia

    P. A. Lavrinenko

Authors
  1. V. I. Baluta
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  2. D. N. Shul’ts
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  3. P. A. Lavrinenko
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Corresponding author

Correspondence to P. A. Lavrinenko.

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The authors declare that they have no conflicts of interest.

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Translated by O. Pismenov

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Baluta, V.I., Shul’ts, D.N. & Lavrinenko, P.A. Assessing the Impact of Global Hydrocarbon Prices on the Russian Economy Based on the DSGE Model with Capital-Owning Firms. Stud. Russ. Econ. Dev. 33, 107–117 (2022). https://doi.org/10.1134/S1075700722010038

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