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Russia's Fiscal Gap

Author

Listed:
  • Goryunov, Eugene
  • Kazakova, Marija
  • Kotlikoff, Laurence J.
  • Mamedov, Arseny
  • Nesterova, Kristina
  • Nazarov, Vladimir
  • Grišina, Elena
  • Trunin, Pavel V.
  • Shpenev, Alexey

Abstract

Every country faces what economists call an intertemporal (across time) budget constraint, which requires that its government’s future expenditures, including the servicing of its outstanding official debt, be covered by its government’s future receipts when measured in present value. The difference between the present value of a country’s future expenditures and its future receipts is called its fiscal gap. This study estimates Russia’s 2013 fiscal gap at 890 trillion rubles or $28 trillion. This longterm budget shortfall is 8.4 percent of the present value of projected GDP. Consequently, eliminating Russia’s fiscal gap on a smooth basis requires fiscal tightening by 8.4 percent of each future year’s projected GDP. One means of doing this is to immediately and permanently raise all Russian taxes by 29 percent. Another is to immediately and permanently cut all spending, apart from servicing outstanding debt, by 22.4 percent. How can a country with vast energy resources and foreign reserves and other financial assets that exceed its official debt still have very major fiscal problems? The answer is that the Russia’s energy resources are finite, whereas its expenditure needs are not. Moreover, Russia is aging and facing massive obligations from its pension system and other age related expenditures.

Suggested Citation

  • Goryunov, Eugene & Kazakova, Marija & Kotlikoff, Laurence J. & Mamedov, Arseny & Nesterova, Kristina & Nazarov, Vladimir & Grišina, Elena & Trunin, Pavel V. & Shpenev, Alexey, 2013. "Russia's Fiscal Gap," EconStor Preprints 121938, ZBW - Leibniz Information Centre for Economics.
  • Handle: RePEc:zbw:esprep:121938
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    File URL: https://www.econstor.eu/bitstream/10419/121938/1/prepeng%20%281%29.pdf
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    Other versions of this item:

    • Eugene Goryunov & Maria Kazakova & Laurence J. Kotlikoff & Arseny Mamedov & Kristina Nesterova & Vladimir Nazarov & Elena Grishina & Pavel Trunin & Alexey Shpenev, 2013. "Russia's Fiscal Gap," NBER Working Papers 19608, National Bureau of Economic Research, Inc.

    References listed on IDEAS

    as
    1. Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1991. "Generational Accounts: A Meaningful Alternative to Deficit Accounting," NBER Chapters,in: Tax Policy and the Economy, Volume 5, pages 55-110 National Bureau of Economic Research, Inc.
    2. Richard W. Evans & Laurence J. Kotlikoff & Kerk L. Phillips, 2012. "Game Over: Simulating Unsustainable Fiscal Policy," NBER Chapters,in: Fiscal Policy after the Financial Crisis, pages 177-202 National Bureau of Economic Research, Inc.
    3. Jagadeesh Gokhale & Bernd Raffelhüschen, 1999. "Population aging and fiscal policy in Europe and the United States," Economic Review, Federal Reserve Bank of Cleveland, issue Q IV, pages 10-20.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Matsen, Egil & Natvik, Gisle J. & Torvik, Ragnar, 2016. "Petro populism," Journal of Development Economics, Elsevier, vol. 118(C), pages 1-12.
      • Egil Matsen & Ragnar Torvik & Gisle J. Natvik, 2012. "Petro populism," Working Paper Series 12812, Department of Economics, Norwegian University of Science and Technology.
      • Egil Matsen & Gisle J. Natvik & Ragnar Torvik, 2012. "Petro populism," Working Paper 2012/06, Norges Bank.
      • Egil Matsen & Gisle J. Natvik & Ragnar Torvik, 2014. "Petro Populism," Working Papers No 1/2014, Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School.
    2. Sergey Sinelnikov-Murylev & Eugene Goryunov & Laurence Kotlikoff, 2015. "Theoretical foundations of fiscal gap as a long-term fiscal sustainability indicator and its estimates for Russia," Research Paper Series, Gaidar Institute for Economic Policy, issue 168P, pages 1-58.
    3. repec:nos:voprec:2017-09-1 is not listed on IDEAS
    4. Goryunov, Yevgeniy, 2016. "Theoretical foundations, properties and interpretation of the budget gap indicators," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 2, pages 112-132, April.
    5. Bodrova, Vera & Gvozdeva, Margarita & Kazakova, Maria, 2015. "Methods of Long-term Forecasting: Comparative Analysis and Foreign Experience of Applying," Published Papers 2310, Russian Presidential Academy of National Economy and Public Administration.
    6. repec:eee:rujoec:v:3:y:2017:i:3:p:221-239 is not listed on IDEAS
    7. Kazakova, Maria & Nesterova, Kristina, 2015. "Long-Term Forecast of the Main Parameters of the Budgetary System of Russia," Published Papers 2309, Russian Presidential Academy of National Economy and Public Administration.

    More about this item

    Keywords

    fiscal gap; Russia;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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