Measuring the macroeconomic growth dynamics in Russia: Potential level and short-term gaps
Abstract
To analyze the economic growth, the ratio of aggregate supply and demand, expansions and contractions in economic activity, we need information on how much the current total output differs from its potential level. The appropriate measures of monetary policies – consolidation or stimulation to smooth out the fluctuations of macroeconomic development – depend on whether the economic aggregate is growing above or below its potential level.
Under the neo-Keynesian economic theory, it is assumed that such an unobserved component in the dynamics of the gross domestic product as a long-term potential level corresponds to an equilibrium of the price level while its short-term gaps with real dynamics reflect the processes of price and income adaptation to shocks.
The article explores the concept of potential level and short-term gaps in economic growth as well as an algorithm to calculate them using the production function (the Cobb-Douglas specification). The results of an empirical assessment of the potential level and short-term gaps in the dynamics of Russian gross domestic product for 2006-2016 are presented. Based on the results obtained, one determined the amplitude and vector of the actual aggregate output deviations from the potential capabilities of the economy, formulated the factors contributed to reducing the output potential level and measures that can strengthen the national economic growth.
Beginning in mid-2014, the negative output gap corresponded to crisis phenomena when labour and capital were not fully used. The negative nature of the "speed regime" of the Russian economy can be changed only through those structural reforms that will be conducted in a thoughtful sequence and in accordance with additional support the development of new knowledge, products and technologies.
About the Authors
Liudmila KitrarRussian Federation
Centre for Business Tendency Studies, Deputy Director
Tamara Lipkind
Russian Federation
Centre for Business Tendency Studies, leading expert
Georgy Ostapkovich
Centre for Business Tendency Studies, Director
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Review
For citations:
Kitrar L., Lipkind T., Ostapkovich G. Measuring the macroeconomic growth dynamics in Russia: Potential level and short-term gaps. Voprosy statistiki. 2017;1(11).
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