The Economic Impact of Public Investment and Russian Import Ban on Russian Economy: A CGE Analysis

Abstract

In this study, we estimate the impact of Russian import ban and change in public investment on the economy of Russia, mainly on the sectoral production. We apply the recursive dynamic computable general equilibrium model (CGE) that we developed for Russian economy. The model is calibrated for 2011 and provides scenario development up to 2030. We develop scenarios that tackle public investment and Russian import ban to examine their effects on the economy of Russia. The results suggest that increase in public investments positively affects production and total sales in all sectors of the economy, but mostly in the capital-intensive ones. The imposition of import ban negatively affects both exports and imports of Russia. Another finding is that GDP growth rises significantly as public investment increases.