The Bulletin of the Institute of Economics of the Russian Academy of Sciences № 2/2025.  Finance.

Andrey V. Polbin

Cand. Sci. (Econ.), Head of the Laboratory for Mathematical Modeling of Economic Processes, Gaidar Institute for Economic Policy; Leading Researcher, Financial University under the Government of the Russian Federation, Moscow, Russia

ORCID: 0000-0003-4683-8194

Margarita A. Kropocheva

Researcher, Laboratory for Mathematical Modeling of Economic Processes, Gaidar Institute for Economic Policy, Moscow, Russia

ORCID: 0000-0001-5069-7094

THE IMPACT OF DOWNWARD NOMINAL WAGE RIGIDITY ON FISCAL AND MONETARY POLICY IN RUSSIA

93-119

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This paper evaluates the impact of downward nominal wage rigidity (DNWR) on fiscal and monetary policy for Russian economy. We obtain a piecewise linear approximation of the solution for DSGE model, which makes it possible to take into account the constraint on wage dynamics. The results indicate greater efficiency of fiscal policy during a recession compared to an economic expansion. In addition, the dependence of the multipliers value on the nature of the shock affecting the economy is noted. The efficiency of monetary policy, on the contrary, is lower in the presence of DNWR. The results of the study allow us to conclude that DNWR plays a significant role as one of the factors weakening the impact of monetary policy and causing the asymmetry of government spending multipliers. The results of the study can be useful in planning fiscal and monetary policy, as well as in constructing DSGE models that capture more complex dynamics of economic indicators.

Keywords: dynamic stochastic general equilibrium models, DSGE, government spending multiplier, downward nominal wage rigidity, DNWR.

JEL: C68, E63

EDN: LTTGAI

DOI: https://doi.org/10.52180/2073-6487_2025_2_93_119

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Manuscript submission date: 18.02.2025

Manuscript acceptance date: 16.04.2025

For citation:

Polbin A.V., Kropocheva M.A. The Impact of downward nominal wage rigidity on fiscal and monetary policy in Russia// Vestnik Instituta Ekonomiki Rossiyskoy Akademii Nauk. 2025. № 2. Pp. 93-119. (In Russ.). https://doi.org/10.52180/2073-6487_2025_2_93_119 EDN: LTTGAI

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