IDEAS home Printed from https://ideas.repec.org/p/zbw/bofitp/bdp2004_002.html
   My bibliography  Save this paper

Distortion costs and effects of price liberalisation in Russian energy markets: A CGE analysis

Author

Listed:
  • Kerkelä, Leena

Abstract

Russia s economy is energy intense and wasteful of resources.This situation has arisen in part due to the country s ample energy supplies and regulated privileges for domestic consumers.Recently enacted and proposed reforms intended to increase the efficiency of the energy sector by raising domestic energy prices also have implications for the export levels of Russian energy commodities. In this study, we estimate the costs of the subsidised energy system in an allocative sense and then analyse recent moves of the Duma to boost gas and electricity prices to bring them into line with market-based pricing.Our analysis uses a multi-region general equilibrium model (GTAP) modified to express the global dimensions of the subsidisation policy and suggested reforms.Preliminary results show that current subsidies extract over 6% of GDP and limit the potential benefits of Russia s comparative advantage in energy commodities.Increases of 6% in electricity and 10% in the price of regulated gas improve efficiency by reducing distorting subsidies and distinctly shifting output from domestic markets to exports.

Suggested Citation

  • Kerkelä, Leena, 2004. "Distortion costs and effects of price liberalisation in Russian energy markets: A CGE analysis," BOFIT Discussion Papers 2/2004, Bank of Finland Institute for Emerging Economies (BOFIT).
    • Handle: RePEc:zbw:bofitp:bdp2004_002
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/212533/1/bofit-dp2004-002.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gérard Roland, 2004. "Transition and Economics: Politics, Markets, and Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 026268148x, December.
    2. McDougall, Robert, 2003. "Russian Energy Taxes for GTAP 5.3," GTAP Research Memoranda 1369, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    3. Kennedy, David, 2002. "Regulatory reform and market development in power sectors of transition economies: the case of Kazakhstan," Energy Policy, Elsevier, vol. 30(3), pages 219-233, February.
    4. repec:zbw:bofitp:2003_012 is not listed on IDEAS
    5. Vaittinen, Risto, 2003. "Liberalisation of Agricultural Trade - Global Implications and what it Means for the EU," Discussion Papers 303, VATT Institute for Economic Research.
    6. W. Jill Harrison & J. Mark Horridge & K.R. Pearson, 2000. "Decomposing Simulation Results with Respect to Exogenous Shocks," Computational Economics, Springer;Society for Computational Economics, vol. 15(3), pages 227-249, June.
    7. Widgren, Mika & Sulamaa, Pekka, 2003. "EU Enlargement and Beyond: A Simulation Study on EU and CIS Integration," CEPR Discussion Papers 3768, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:zbw:bofitp:2004_002 is not listed on IDEAS
    2. Kerkelä, Leena, 2004. "Distortion costs and effects of price liberalisation in Russian energy markets : A CGE analysis," BOFIT Discussion Papers 2/2004, Bank of Finland, Institute for Economies in Transition.
    3. Jacobsen, Lars-Bo, 2004. "Organic Production in a Dynamic CGE Model – Effects of the 2003 Reform of the CAP," Conference papers 331256, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Katja Mann, 2015. "The EU, a Growth Engine? The Impact of European Integration on Economic Growth in Central Eastern Europe," FIW Working Paper series 136, FIW.
    5. Eicher, Theo S. & Schreiber, Till, 2010. "Structural policies and growth: Time series evidence from a natural experiment," Journal of Development Economics, Elsevier, vol. 91(1), pages 169-179, January.
    6. Oliver Schenker, 2013. "Exchanging Goods and Damages: The Role of Trade on the Distribution of Climate Change Costs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(2), pages 261-282, February.
    7. Lamo, Ana & Messina, Julián & Wasmer, Etienne, 2011. "Are specific skills an obstacle to labor market adjustment?," Labour Economics, Elsevier, vol. 18(2), pages 240-256, April.
    8. Pavel Ciaian & Ján Pokrivčák & Dušan Drabik, 2008. "Prečo sú niektoré sektory v tranzitívnych ekonomikách menej reformované ako ostatné? prípad výskumu a vzdelávania v oblasti ekonómie [Why some sectors of transition economies are less reformed than," Politická ekonomie, Prague University of Economics and Business, vol. 2008(6), pages 819-836.
    9. Gersbach, Hans & Jackson, Matthew O. & Muller, Philippe & Tejada, Oriol, 2023. "Electoral competition with costly policy changes: A dynamic perspective," Journal of Economic Theory, Elsevier, vol. 214(C).
    10. Masten, Arjana Brezigar & Coricelli, Fabrizio & Masten, Igor, 2008. "Non-linear growth effects of financial development: Does financial integration matter?," Journal of International Money and Finance, Elsevier, vol. 27(2), pages 295-313, March.
    11. Grzegorz W. Kolodko, 2009. "A Two-thirds Rate of Success: Polish Transformation and Economic Development, 1989-2008," WIDER Working Paper Series RP2009-14, World Institute for Development Economic Research (UNU-WIDER).
    12. repec:wvu:wpaper:06-03 is not listed on IDEAS
    13. Grigoriadis, Theocharis, 2017. "Religion, administration & public goods: Experimental evidence from Russia," Economic Modelling, Elsevier, vol. 66(C), pages 42-60.
    14. Grajzl, Peter & Baniak, Andrzej, 2018. "Private enforcement, corruption, and antitrust design," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 284-307.
    15. Mübariz Hasanov & Tolga Omay, 2011. "The Relationship Between Inflation, Output Growth, and Their Uncertainties: Evidence from Selected CEE Countries," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 47(0), pages 5-20, July.
    16. Mark Gradstein & Branko Milanovic, 2004. "Does Libertè = Egalité? A Survey of the Empirical Links between Democracy and Inequality with Some Evidence on the Transition Economies," Journal of Economic Surveys, Wiley Blackwell, vol. 18(4), pages 515-537, September.
    17. Nandini Gupta & John C. Ham & Jan Svejnar, 2000. "Priorities and Sequencing in Privatization: Theory and Evidence from the Czech Republic," William Davidson Institute Working Papers Series 323, William Davidson Institute at the University of Michigan.
    18. Fidrmuc, Jana P. & Fidrmuc, Jan, 2006. "Can you teach old dogs new tricks? On complementarity of human capital and incentives," Journal of International Money and Finance, Elsevier, vol. 25(3), pages 445-458, April.
    19. Anderson, Kym & Jackson, Lee Ann, 2004. "GM food technology abroad and its implications for Australia and New Zealand," 2004 Conference (48th), February 11-13, 2004, Melbourne, Australia 58365, Australian Agricultural and Resource Economics Society.
    20. Chad E. Hart & John C. Beghin, 2004. "Rethinking Agricultural Domestic Support under the World Trade Organization," Center for Agricultural and Rural Development (CARD) Publications 04-bp43, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    21. Fernández, Esteban & Fernández, Paula, 2008. "An extension to Sun's decomposition methodology: The Path Based approach," Energy Economics, Elsevier, vol. 30(3), pages 1020-1036, May.
    22. Катышев П.К. & Полтерович В.М., 2006. "Политика Реформ, Начальные Условия И Трансформационный Спад," Журнал Экономика и математические методы (ЭММ), Центральный Экономико-Математический Институт (ЦЭМИ), vol. 42(4), октябрь.

    More about this item

    Keywords

    CGE modelling; energy market liberalisation; Russia;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:bofitp:bdp2004_002. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/bofitfi.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.