IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

A Three-Sector Model of the Russian Virtual Economy

  • Agapov Stanislav
  • Boyarchenko Svetlana


  • Levendorsky Sergey


The Russian economy has evolved into a hybrid form, a partially monetized quasi-market system that has been called the virtual economy. In the virtual economy, barter and non-monetary transactions play a key role in transferring value from productive activities to the natural monopolies and loss-making sectors of the economy. The project aims at providing a consistent and multi-facet exposition of main features of the Russian virtual economy, and explains why it is different from other transition economies. In particular, the endogenous appearance of money substitutes and wide-spread use of non-monetary transactions are explained as a result of the optimizing behavior of agents in the economy, given the inherited distorted structure, the existence of large natural monopolies, the unproductive sector organized into informal networks, and the government policies aimed at the support of this sector. We highlight the typical distortions of the price system, and provide an explanation of the observed dynamics of the volume of money substitutes in circulation after August 1998 crisis. We show that the Russian virtual economy can be in one of two steady states with approximately the same price systems but essentially different volumes of money substitutes in circulation. Transition into the state with the smaller volume of money substitutes in circulation can be caused by an increase of the number of active producers resulting from some external shock. We conjecture that should the productive business activity be suppressed, then the economy can swiftly return to the former state with the large volume of money substitutes in circulation.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Our checks indicate that this address may not be valid because: 404 Not Found. If this is indeed the case, please notify (Anton Pashchenko)

Download Restriction: no

Paper provided by EERC Research Network, Russia and CIS in its series EERC Working Paper Series with number 02-06e.

in new window

Length: 38 pages
Date of creation: 13 Feb 2003
Date of revision:
Handle: RePEc:eer:wpalle:02-06e
Contact details of provider: Postal: EERC Research Network, Russia and CIS, 1, Mazepy Str., suite 202, Kyiv, 01010 Ukraine
Phone: +38(044)492-8012
Fax: +1(202)478-1968
Web page:

Order Information: Postal: EERC Research Network, Russia and CIS, 1, Mazepy Str., suite 202, Kyiv, 01010 Ukraine
Web: Email:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eer:wpalle:02-06e. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anton Pashchenko)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.