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. Vaittinen, Risto, 2003. "Liberalisation of Agricultural Trade - Global Implications and what it Means for the EU," Discussion Papers 303, VATT Institute for Economic Research.
    2. 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.
    3. Gérard Roland, 2004. "Transition and Economics: Politics, Markets, and Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 026268148x, December.
    4. 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.
    5. 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.
    6. 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.
    7. Riipinen, Toni, 2003. "Energy market liberalisation in the FSU : Simulations with the GTAP model," BOFIT Discussion Papers 12/2003, Bank of Finland, Institute for Economies in Transition.
    8. repec:zbw:bofitp:2003_012 is not listed on IDEAS
    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. 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.
    2. repec:zbw:bofitp:2004_002 is not listed on IDEAS
    3. 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.
    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. Rode, Martin & Gwartney, James D., 2012. "Does democratization facilitate economic liberalization?," European Journal of Political Economy, Elsevier, vol. 28(4), pages 607-619.
    8. Ofer, Gur, 2010. "Twenty Years Later and the Socialist Heritage is still Kicking: the Case of Russia," WIDER Working Paper Series 059, World Institute for Development Economic Research (UNU-WIDER).
    9. 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.
    10. Simeon Djankov & Edward Miguel & Yingyi Qian & Gérard Roland & Ekaterina Zhuravskaya, 2005. "Who are Russia's Entrepreneurs?," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 587-597, 04/05.
    11. 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.
    12. Wang, Yong, 2015. "A model of sequential reforms and economic convergence: The case of China," China Economic Review, Elsevier, vol. 32(C), pages 1-26.
    13. Doh‐Shin Jeon & Jean‐Jacques Laffont, 2006. "Labor Market Information Acquisition and Downsizing," Review of Development Economics, Wiley Blackwell, vol. 10(3), pages 347-366, August.
    14. Pierre Salmon, 2003. "The assignment of powers in an open-ended European Union," Post-Print hal-00445601, HAL.
    15. Francesco Felici & Maria Gesualdo, 2014. "ORANI-IT: a computable general equilibrium model of Italy," Working Papers 7, Department of the Treasury, Ministry of the Economy and of Finance.
    16. 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).
    17. Torbjörn Becker & Anders Olofsgård, 2018. "Introduction," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 26(4), pages 581-587, October.
    18. 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.
    19. Marc Vielle, 2020. "Navigating various flexibility mechanisms under European burden-sharing," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 22(2), pages 267-313, April.
    20. 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).
    21. Kornai, János, 2005. "Közép-Kelet-Európa nagy átalakulása - siker és csalódás [The great transformation of Central and Eastern Europe - success and disappointment]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 907-936.

    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.