Financial Analytics: Science and Experience

Abstracting and Indexing

Referativny Zhurnal VINITI RAS
Google Scholar

Online available



Cyberleninka (12 month OA embargo)

Fiscal imbalance and economic growth of Russia

Vol. 12, Iss. 1, MARCH 2019

Received: 11 September 2018

Received in revised form: 9 October 2018

Accepted: 26 October 2018

Available online: 28 February 2019

Subject Heading: Economic policy

JEL Classification: E22, H63, O40

Pages: 4–22

Alekhin B.I. Russian State University for the Humanities (RSUH), Moscow, Russian Federation

Subject This article examines the impact of the Federal budget deficit on Russia's economic growth and the increasing crowding-out effect.
Objectives The study attempts to trace the relationship between the non-oil deficit of the Federal budget and the growth of Russia's economy within Q1, 2005 to Q1, 2018 (53 quarterly observations).
Methods The study uses the Solow–Swan growth model supplemented by the Deficit and Interest Expense variables. The econometric methodology includes tests for collinearity and stationarity to select explanatory variables. Due to different degree of integratedness of variables, the Autoregressive Distributed Lag model is used.
Results Bounds tests point to a positive long-term relationship between fiscal imbalance and economic growth. One-percent growth of the former was followed by 0,1-percent growth of the latter. Debt service charges, while having the expected symbol, statistically are insignificant. As for the short-run dynamics, it took economic agents three and a half quarters to restore the balance between dependent and independent variables.
Conclusions The study found no evidence of crowding-out. Rather, the debt burden was offset by the capital expenditure financed by borrowed funds that increased Russia's national income.

Keywords: budget deficit, economic growth, cointegration


  1. Spencer R.W., Yohe W.P. The “Crowding Out” of Private Expenditures by Fiscal Policy Action. Federal Reserve Bank of St. Louis Review, October 1970, pp. 12–24. URL: Link
  2. Modigliani F. Long-Run Implications of Alternative Fiscal Policies and the Burden of the National Debt. The Economic Journal, 1961, vol. 71, iss. 284, pp. 730–755.
  3. Kim E., Ha Y., Kim S. Public Debt, Corruption and Sustainable Economic Growth. Sustainability, 2017, vol. 9, iss. 3, pp. 1–30. URL: Link
  4. Bhaskara Rao B. Time-Series Econometrics of Growth-Models: A Guide for the Applied Economist. Applied Economics, 2010, vol. 42, iss. 1, pp. 73–86. URL: Link
  5. Kantorovich G.G. [Time series analysis]. Ekonomicheskii zhurnal Vysshei shkoly ekonomiki = Economic Journal of the Higher School of Economics, 2002, vol. 6, no. 2, pp. 251–273. (In Russ.)
  6. Campos J., Ericsson N.R., Hendry D.F. (Eds). General-to-Specific Modelling. Edward Elgar Publishing, Cheltenham, 2005, 1424 p.
  7. Arltová M., Fedorová D. Selection of Unit Root Test on the Basis of Length of the Time Series and Value of AR(1) Parameter. Statistika, 2016, vol. 96, iss. 3, pp. 47–64. URL: Link
  8. Pesaran M.H., Shin Y. An Autoregressive Distributed-Lag Modelling Approach to Cointegration Analysis. In: Econometrics and Economic Theory in the 20th Century: The Ragnar Frisch Centennial Symposium. Cambridge, Cambridge University Press, 1999. URL: Link
  9. Engle R.F., Granger C.W.J. Co-Integration and Error Correction: Representation, Estimation, and Testing. Econometrica, 1987, vol. 55, iss. 2, pp. 251–276. URL: Link
  10. Pesaran M.H., Shin Y., Smith R.J. Bounds Testing Approaches to the Analysis of Level Relationships. Journal of Applied Econometrics, 2001, vol. 16, iss. 3, pp. 289–326. URL: Link
  11. Makuyana G., Odhiambo N.M. Public and Private Investment and Economic Growth: A Review. The Journal of Accounting and Management, 2016, vol. 6, iss. 2, pp. 25–42.

View all articles of issue


ISSN 2311-8768 (Online)
ISSN 2073-4484 (Print)

Journal current issue

Vol. 12, Iss. 2
June 2019