BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
Fiscal policy and regional output volatility: Evidence from Russia
(), Jarko Fidrmuc
() and Zuzana Fungácová
Abstract: This paper investigates the relationship between fiscal
policy and output volatility in Russian regions between 2000 and 2009.
System GMM estimation techniques are used to account for potential
endogeneity between output volatility and fiscal developments. Our main
finding is that fiscal activism, proxied by various measures of
discretionary fiscal policy, contributes to output volatility and so
induces macroeconomic instability at the regional level in Russia. This
result corroborates previous studies using cross-country data. To reduce
business cycle fluctuations, it would be necessary to curtail pro-cyclical
fiscal activism at the regional level, e.g. via fiscal rules and sound
institutions of fiscal federalism.
Keywords: output volatility; automatic stabilizers; discretionary fiscal policy; dynamic panel models; Russia; (follow links to similar papers)
JEL-Codes: E32; E62; R11; (follow links to similar papers)
43 pages, June 17, 2013
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
Questions (including download problems) about the papers in this series should be directed to Päivi Määttä ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design by Joachim Ekebom