Financial Journal

p. 25-53

Authors: Samvel S. Lazaryan, Maria A. Elkina

The financial sector plays a crucial role in the economy, not only being a simple intermediary between creditors and borrowers, but also having a significant impact on the economy’s development and its various characteristics. For this reason, accounting for financial sector peculiarities is critical when developing policy-oriented general equilibrium models for practical use. This drives the interest of many researchers in development of approaches to describing the financial sector and financial frictions in DSGE models. In financial frictions models one can describe the production side of the economy in a simplistic way. However, it could be important to model the production sector in more detail. For instance, separating tradable and non-tradable sectors of the economy could be of great significance, especially for developing economies which depend on foreign trade a lot. In this paper we analyze the role of the financial sector and how important it is for transmission of monetary and fiscal shocks under different assumptions about the production sector. Namely, we compare two-sector economy with tradable and non-tradable sectors with a simplistic model which assumes that the economy produces only tradable goods. According to the results, financial frictions impact tradable and nontradable sectors asymmetrically. In the two-sector model the effect of financial frictions is quantitatively smaller than in the one-sector economy. Therefore, using the latter simplifying assumption could lead to overestimating the role of financial frictions in the transmission of monetary and fiscal shocks. In addition, the paper provides estimates of how changes in monetary and fiscal policy instruments impact the Russian economy given the existence of financial frictions.

p. 81-97

Authors: Anna V. Tikhonova

The present article examines the prospect of forming a special chapter of the Model Tax Code for the CIS countries, “Tax on Professional Income.” The relevance of this issue is explained by two circumstances—first, a growing share of self-employed citizens, among whom a significant part work outside the legal framework; and second, the possible labor migration of this category of payers between the CIS countries. As a consequence, both factors lead to the need for the formation of common approaches to taxation of self-employed individuals in the member states, codified in the form of a chapter in the Model Tax Code. The purpose of the study is to determine the key elements of the tax on professional income in the CIS countries, which should be indicated in the CIS Model Tax Code as the basic conditions and principles of taxation of self-employed citizens. In accordance with the goal, the author analyzed the tax and labor legislation of the CIS member states, as well as the associated member, the Republic of Turkmenistan. A review of legal acts showed that there is no single conceptual apparatus (“self-employment,” “selfemployed”) in the analyzed countries. This fact prevents the development of a unified approach to determining the circle of taxpayers within the special regime. National legislation has developed three approaches to taxing the self-employed. The first approach is that the self-employed are singled out into an independent category of payers with the presence of the corresponding features of taxation. The second approach consists in the absence of specific conditions of taxation in the presence of a standard individual income tax levied on a general basis. The third approach involves the formation in the construct of a number of taxes and special tax regimes of specific conditions for the taxation of the self-employed. At the end of the article, recommendations are given on the content of a special chapter of the Model Tax Code, taking into account the peculiarities of economic and social development, the state of tax administration, and the “tax” susceptibility of the population of the CIS countries. As an approach to taxation of the self-employed, it is proposed to apply the first one cited, based on the allocation of an independent category of payers.

p. 117-131

Authors: Elena B. Veprikova, Aleksei A. Novitskii

Exemplified by regions of the Russian Far East, the article presents a view on the current state and problems of managing regional public expenditures, including the focus of public expenditure on regional development. The research is based on the data from expenditure commitments registries in 2019. A major share of budget expenditures is “compulsory” (pre-determined) expenditures, which have limited flexibility and cannot be redirected to different purposes. Under these circumstances, the ability of regional governments to vary the direction of budget spending and finance self-initiated expenditure commitments—in other words, to independently manage the composition of expenditures—is kept to a minimum, which implies low autonomy in managing expenditures. Most of the Russian Far Eastern regions’ government expenditures are aimed at supporting the current volume and quality of public services. The share of developmental expenditures is higher in regions having more budget resources (Sakhalin Oblast), and significantly lower in regions of the northern Far East (Magadan Oblast, Kamchatka Krai, and Sakha Republic (Yakutia)), the latter having higher costs of supporting critical infrastructure under severe climate conditions. In the present situation, regional governments cannot be fully considered as key influencers managing the development of their territories, and only fill the role of executors and lobbying actors for acquiring financial support from the federal government. As a result, it is difficult to account for specific territorial circumstances and development potential, and the overall efficiency of government spending is decreased. In the authors’ opinion, the findings may be applicable to most regions in the Russian Federation.