Assessing Fiscal Stabilization and Sustainability of Public Finance in Russia

Abstract

This paper evaluates the performance of fiscal policy in Russia during the period of 2003–2008 with respect to fiscal stabilization and fiscal sustainability aspects. The actual and structural indicators of macroeconomic impact of fiscal policy (budget balance, fiscal impulse) are estimated. The paper finds the procyclical elements in fiscal policy in Russia.

Different approaches to the definition of fiscal sustainability and calculation of stable levels of government finance indicators are analyzed. The sustainable stance of fiscal policy is estimated under different macroeconomic scenarios as an example of the practical implication of these approaches. The paper finds the necessity of toughening of fiscal policy in Russia in the long-run period.