This research examines the impact of positive crude oil revenue shocks on Russia’s macroeconomic policy and economic development, analyzes the effects of macroeconomic policy on the economy, and compares these effects across two subsamples (2005–2013 and 2015–2019). The study proves that the full 2005–2019 model fails to capture the transmission responses of policy and macroeconomic variables after the significant structural shift in the post-2014 period, while subsample models each provide a better fit and more accurate results. Our empirical research provides the following insights: First, after 2014, fiscal expansion shifted from an anti-inflationary tool to an inflationary driver as well as a depreciating force on the national currency. Second, after 2014 the monetary policy’s tight stance became explicitly anti-inflationary compared with its direct opposite effects before 2014. Third, after 2014, the central bank’s more dominant inflation-targeting regime tightened the constraints on fiscal policy. Fourth, the Russian Federation’s economic dependence on oil diminished after 2014. Finally, macroeconomic policy (government expenditure and key interest rate) shifted from procyclical to countercyclical in response to oil revenue shocks after 2014.
Chernykh et al. (Tue,) studied this question.