In this paper we analyze factors which influence the dynamics of the Russian budgetsystem revenues using econometric models. In our models we incorporate the followingfactors: Urals crude oil price, ruble exchange rate, inflation rate and real GDP. For thepurpose of distinguishing the impact of these factors on the revenues more clearly weconduct their preliminary orthogonalization that requires defining a prespecified order inwhich they influence each other. It is determined by exogeneity (or endogeneity) of thefactors using a vector autoregression and its impulse-response function. The constructedmodels are later used for measuring the contribution of each factor to the variation ofrevenues on all the levels of the budget system. Our analysis shows that dependence ofthe Russian budget on oil price fluctuations is much stronger than it could be inferredfrom simply calculating the share of oil and gas revenues. In recent years, the oil andgas sector was providing from 22 to 28% of the expanded government budget revenues,and from 40 to 50% of the federal government budget revenues. However, according toour estimates, the variation of oil and gas revenues explains from 60 to 70% of the totalvariations of these revenues. These calculations are used in order to evaluate Russia’spotential to reduce its budget expenditure variation through introducing a strict budgetrule. We demonstrate how Russia’s place among the G20 economies can change interms of stability of the government expenditure dynamics. We also discuss a possibleamplification of our analysis.

Keywords: budget system, revenues fluctuations, dependence on oil prices, econometric
modeling, variance decomposition.
JEL: C38, H20, Н50.

Alexey I. BALAEV, Cand. Sci. (Ph. and Math.), Economic Expert Group (5/4, Vetoshny per., Moscow, 109012, Russian Federation); Financial Research Institute (3/2, Nastasyinskiy per., Moscow, 127006, Russian Federation).
E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

This article touches upon the main reasons for the decline of long-term growth of theRussian economy, stagflation, and recession and attempts to justify priority measuresof the economic policy in current conditions. Basing on statistical and macroeconomicanalysis, the author concludes that the slowdown of economic growth since 2012 hasa structural nature. It is also noted that in late 2014–2015, negative effects caused bytransition to a new general equilibrium (trend), which is characterized by a lower longtermeconomic growth rate, were aggravated by a conjuncture cycle associated with theemergence of the balance of payment crisis, which consequences are largely overcometoday. A rapid correction of the current account and real wages was made thanks to thepolicy of free floating exchange rate, and this allowed the economy to move to a recoverygrowth on a quarterly basis in the second half of 2016. However, it is too early to speakabout full adaptation to the changing conditions of the global economy (at least, beforethe stabilization of the public finances) and elimination of structural imbalances in theeconomy that are negatively affecting the GDP growth rate. In this article, the authorlays down key challenges in the field of structural policy and institutional environmentimprovements, as well as provides conservative macroeconomic policy guidelines aimedat decreasing inflation and improving long-term fiscal sustainability. It is emphasizedthat implementation of these measures will create necessary conditions for transition tothe investment model of economic growth in Russia.

Keywords: Russia, economic growth, inflation rate, monetary policy, fiscal policy, structuralreforms.

JEL: E52, E62, E66, O43.

Ivan Ya. Darovskii, The Department of Economic Theory and Economic Policy. St. Petersburg State University (7–9, Universitetskaya nab., St. Petersburg, 199034, Russian Federation).
E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

This paper examines the relationship between the import price rigidity and the invoicecurrency of goods imported to Russia. Microdata on the import of goods to Russia overa period from 2002 to 2015 allowed to assess the degree of price rigidity to the exchange98 Валюта контракта и жесткость цен на импортные товары в Россииrate fluctuations at a disaggregated level, which is the first time this kind of research wasapplied to the Russian economy. The empirical estimates of prices of goods denominatedin different currencies are in line with similar results available in the world literatureon price rigidity and exchange rate pass-through. According to panel data analysis,prices of imported goods denominated in domestic currency (Russian ruble) show littlereaction to exchange rate fluctuations, while prices of imported goods denominated inforeign currency (US dollar, euro) almost completely copy the dynamics of exchangerate movements.This paper also documents sector-dependent differences of influence of the invoicecurrency on the degree of the imported goods price rigidity to fluctuations in the exchangerate. Some imported goods denominated in Russian ruble do not show complete pricerigidity to exchange rate fluctuations, for example, products of plant origin, textiles,and headgear. Deviation from zero rigidity to the exchange rate shocks for importedgoods denominated in foreign currencies is observed only for fats and oils of animal orvegetable origin.

Keywords: price rigidity, exchange rates, pass-through, prices of imported goods, inflation.

JEL: C33, D22, E31, F14, F31.

Yury A. Pleskachev, Institute of Applied Economic Research, Russian Presidential Academy of National Economy and Public Administration (82, Vernadskogo prosp., Moscow, 119571, Russian Federation).
E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Yury Yu. Ponomarev, PhD (Econ.), Institute of Applied Economic Research, Russian Presidential Academy of National Economy and Public Administration (82, Vernadskogo prosp., Moscow, 119571, Russian Federation); Gaidar Institute for Economic Policy (3–5, Gazetny per., Moscow, 125009, Russian Federation).
E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

The article deals with the problem of finding out factors promoting high export growthrates and successful import substitution after the sharp real exchange rate depreciation,which took place in Russia. The share of domestically-produced goods and services indomestic demand based on current prices, as well as the growth rate of the domesticdemand covered by domestic production, are used as indicators for import substitution.Following the results of cross-country panel regressions, it is demonstrated thatRussia’s positive net foreign assets position is favourable for export growth after thedepreciation. On the other hand, the share of imported components in Russian nonoil-and-gas exports is close to the world average, so it cannot be stated that Russia’sexport structure is favourable from the viewpoint of the magnitude of the depreciation’spositive impact. The analysis of Russia’s non-oil-and-gas exports dynamics measuredin constant prices, shows that in recent years, the growth rates undershot the modeledones. According to the net exports dynamics, in 2014–2015, this discrepancy was offsetby the fact that the import contraction rates were significantly higher than the modeledones. In 2016, however, the contribution of “additional” (as compared to the model)net exports fell to zero. The analysis also demonstrates that in the medium term, lowquality of the institutional environment in Russia hinders maintaining momentumfor exports and import substitution associated with the depreciation. Thus, despitethe significance of the currently in-progress measures promoting non-commodityexports and import substitution, they should be complemented by constant efforts aimed at reducing investment risks, enhancing quality of governance, and safeguardingcompetition.

Keywords: export support policy, import substitution, real exchange rate.

JEL: F14.

Ilya V. Prilepskiy, Cand. Sci. (Phys.-Math.), Economic Expert Group (5/4, Vetoshny per., Moscow, 109012, Russian Federation); Financial Research Institute (3 bldg., 2, Nastasyinsky per., Moscow, 127006, Russian Federation).
E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

ПредмThe subject of the article is effective institutional support of entrepreneurship inRussian regions. Modern conditions of Russian business activity are characterized bya significant level of uncertainty in the institutional environment, which considerablyvaries in different regions. In order to improve the quality of institutional parametersof the business environment research in a spatial context, it is proposed to use theinstitutional configurations methodology. The authors assume that real differentiationof business conditions in the regional context is determined by the parameters ofthe institutional configuration of the business environment. As a result of the study,the definition of the concept of “institutional configuration of regional businessenvironment” was clarified. According to it, effectiveness of formal institutions isdetermined by the nature of their interpretation and application by economic agentsin the course of interaction between basic and additional regional institutions andstakeholders. Even in conditions of a formally identical institutional environment,officials in different regions have a free hand to apply different “rules of the game”to business entities. The authors substantiate the idea that most of the time thepower structures interpret and apply formal rules to business entities in a format thatincreases administrative pressure on business and leads to additional withdrawal ofbusiness entities’ entrepreneurial income. The authors propose a model of assessingparameters of the institutional configuration of the business environment basing onthe criterion of administrative pressure on business entities, which allows to calculatetrends and possible scenarios of interaction between government and businessstructures in the Russian regions in the context of existing institutional configurationsof the regional business environment. The results obtained in the article can be used inthe institutional designing process of business environment while justifying parametersof the system of the state regulation of entrepreneurship at the regional and federallevels.

Keywords: institutional configuration of business environment, institutions, entrepreneurship,administrative pressure on business.

JEL: O17, О18.

Natalia Z. Solodilova, Dr. Sci. (Econ.), Professor. Ufa State Petroleum TechnologicalUniversity (1, Kosmonavtov ul., Ufa, 450062, Russian Federation).                                                                                                                                              E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Rustam I. Malikov, Dr. Sci. (Econ.), Professor. Ufa State Petroleum TechnologicalUniversity (1, Kosmonavtov ul., Ufa, 450062, Russian Federation).                                                                                                                                                  E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Constantin E. Grishin, Dr. Sci. (Econ.), Professor. Ufa State Petroleum TechnologicalUniversity (1, Kosmonavtov ul., Ufa, 450062, Russian Federation).                                                                                                                                          E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

The article deals with reforms in the agricultural sector of the Central- and South-Eastern European countries both within the framework of their national economic policyand focusing on institutional harmonization with the European Union. The agrarianreforms were carried out against the background of market mechanisms’ adaptationthat varied depending on current cultural-economic patterns. In most cases, the useof the institutional environment parameters of developed Western countries aimed atworking out guidelines for the agricultural sector reform in the post-socialist countrieshad no practical significance due to existing differences in economic modes andmutual discrepancy in rational business practices. The authors show peculiarities ofthe agricultural development in the countries of the region in 1990–2010s and singleout the main differences between them as far as organizational structure, managementpractices, level of protectionism, production specialization and land regulation areconcerned, including approaches to farm restructuring, privatization and regulation ofland relations. The article also analyses current problems of the implementation of the Common Agricultural Policy in the new EU member states, primarily, the use of supportmechanisms and rural development. In particular, the authors assess the prospects ofthe Central- and South-Eastern European countries’ participation in the developmentof agricultural subsidies criteria and in monitoring of their use. Basing on the relevantempirical evidence, one can conclude that for the sake of developing convergence andinstitutional harmonization in the agricultural sector, the EU needs a differentiatedapproach to strategic planning and solving of agricultural problems in its new memberstates.

Keywords: agriculture, agricultural policy, Central- and South-Eastern Europe, the European Union, land relations, privatization, restitution, farming, subsidies.

JEL: Q10, Q14, Q15.

Mikhail M. Lobanov, Cand. Sci (Geogr.), Senior Research Fellow, Institute of Economics, Russian Academy of Sciences (32, Nakhimovskiy prosp., Moscow, 117218,Russian Federation).                                                                       E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Jelena Zvezdanović-Lobanova, Institute of Social Sciences, Belgrade (45, Kraljice Nataljie ul., Belgrade, 11000, Serbia).                                                                                                                                                                                             E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

In this case-study, we analyse debt restructuring conducted by Russian metallurgicalcompanies Evraz, TMK, Mechel and Rusal, which necessity was caused by the rapiddeterioration of their financial standing during the crisis of 2008. We summarizethe terms of the primary debt restructuting and calculate gains and losses from therestructuring for the companies and their creditors. Under the gain of a debtor weunderstand reduction of the NPV of the future debt payments after the restructuring,and the increase of payments we treat as a loss. The opposite is true for the banks. Weshow that Rusal and Mechel gained from the restructuring, while Evraz and TMKhad to pay for it. With the help of hindsight analysis, we came to the conclusion thatthe choice of creditors must be explained by the financial status of the debtors. Thosecompanies that could pay for the restructuring paid for it, and those that could notservice the debt on the initial terms got significant debt reliefs. Both companies thathad extracted debt reductions from their creditors went through the debt restructuringagain a few years later, and Mechel would probably need a third one. Thus, we showedthat in the course of the debt restructuring the creditors acted rationally. In the courseof our analysis, we also came to an additional conclusion that the creditors had notused Altman's Z-score, presumably, due to possessing more precise instruments ofestimating the probability of the debtors’ bankruptcy. We also propose a methodologicalinnovation for evaluating effectiveness of corporate restructuring, that is, we showhow such a simple and widely known financial indicator as NPV can be used for thispurpose.

Keywords: 2008 financial crisis, bankruptcy, corporate debt, corporate debt restruсturing,metallurgical companies, Russia.

JEL: G21, G33, G34.

Elena V. Chirkova, PhD, Associate Professor, Department of Economics, National Research University Higher School of Economics (26, bldg 4, ul. Shabolovka, Moscow, 119049, Russian Federation).                                                               E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Dinara A. Valieva, Financial Analyst, “Earnest and Young” (77, bldg. 1, Sadovnicheskaya nab., Moscow, 115035, Russian Federation).
E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Yuri S. Menshikov, Financial Analyst, “Earnest and Young” (77, bldg. 1, Sadovnicheskaya nab., Moscow, 115035, Russian Federation).
E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Alexandra O. Nosova, Valuation Specialist, Russian Valuation Service (6, 1st Vysheslavtsev per., Moscow, 127018, Russian Federation).
E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

This article analyses the system of planning the electricity distribution networkdevelopment indicators existing in the Russian Federation. The levels of the electricityplanning system and its structure are also studied.The author presents a retrospective analysis of the electricity consumption planning forthe last 7 years, which shows that the previously studied electricity consumption planningwas based on very optimistic estimates that had never been implemented in practice.The article specifies the main planning problems of the distribution network companies’key indicators and estimates the methods used in the middle and long-term planning ofelectricity consumption.The author emphasizes the main factors affecting the quality of planning the key indicatorsof the electricity distribution network development. They are low quality of statisticalinformation and absence of a long-term retrospective comparative data base; lack of acomprehensive system of data base collection, aggregation and publication of reports;application of different calculation methodologies of the industry’s key indicators; and organizational and structural changes in the offices responsible for statistical dataaggregation (Federal State Statistics Service (FSSS), Federal Antimonopoly Service ofthe Russian Federation (FAS), etc.). Finally, the article offers proposals and recommendations on improving the planningsystem of the electricity distribution network of the Russian Federation aimed at raisingthe reliability of forecasts and, consequently, decreasing the risks of investing in theenergy infrastructure.

Keywords: investments, development planning, prognosis, electricity distribution networks,network companies, electricity consumption, electricity network industry, energy.

JEL: L11, L12, L52, L94, Q48, E21.

Oksana O. Mozgovaya, Director of the Scientific Research and Project ManagementCenter of the Natural Monopoly Economics Institute of The Russian PresidentialAcademy of National Economy and Public Administration (82, Vernadskogo prosp.,Moscow, 119571, Russian Federation).                                                                                                   E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Due to obvious difficulties with collecting data, existing literature on economicanalysis of prostitution seriously lacks empirical evidence. While behavior of anindividual prostitute as an economic agent has been modeled in a number of papers,those models have rarely been supported by quantitative evaluations. The presentarticle follows contemporary approaches to economic analysis of prostitution and atthe same time makes use of the benefits that the Internet has brought to this type ofservice. In comparison to the recent past, modern individual prostitutes have muchmore opportunities to contact their clients online without the help of pimps or otherintermediaries. Thus, the roles of market participants, the structure of risks, as wellas price-setting mechanisms have significantly changed. In order to evaluate factorsaffecting prices set by Moscow prostitutes offering their services online, the articleemploys a hedonic pricing method. The authors show that the key factors are thelocation, where services are provided, and the quality of a profile picture as a proxy forcosts incurred by a prostitute in order to raise the attractiveness of her website profileЕлена Покатович, Владислав Матюшонок 235and her personal appeal. These results may be useful for further analysis of how pricesand revenues in the prostitution market are related to legal markets and could be a partof a potential government policy regarding prostitution.

Keywords: economics of prostitution, online prostitution, pricing analysis, hedonic prices.

JEL: О12, J46, Е26.

Elena V. Pokatovich, Cand. Sci. (Econ.), Associate Professor, National Research University Higher School of Economics (26, Shabolovka ul., Moscow, 119049, Russian Federation).
E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Vladislav D. Matyushonok, National Research University Higher School of Economics (26, Shabolovka ul., Moscow, 119049, Russian Federation).
E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

The food basket contains minimum consumption rates of foodstuffs; it is approved bythe Russian Parliament (the State Duma) and forms the basis of the living standardscalculations thus influencing expenditure budget and minimum wage. Thesecharacteristics of the food basket traditionally attract attention of economists, but itssocial and medical aspects are usually ignored. At the same time people use the foodbasket as a model of consumption behavior, and it forms their habits of healthy orunhealthy nutrition. In practice, the goal of budget economy preponderates over socialgoals, and therefore the food basket features dangerous imbalances which contributeto high morbidity and mortality. The author shows that the food basket does not meetmodern medical requirements since it contains excessive amount of saturated fats andsalt and is low on fruit, vegetables and fish. As part of an interdisciplinary research, theauthor develops a method of harmonization of economic and medical factors of thefood basket. The current state policy in the field of public health should be brought upto date on the basis of improving the food basket, reducing maximum permitted contentof trans-fatty acids and salt in foods, and permitting free import of fruit, vegetables andfish from any country of the world.

Keywords: food basket, living standard, public health, social policy, diet problem, marketregulation.

JEL: D63, H51, I18, I38, Q18.

Boris V. Korneychuk, Dr. Sci. (Econ.), Professor. National Research University Higher School of Economics (16, Soyuza Pechatnikov ul., St. Petersburg, 190008, Russian Federation).
E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it