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The External and Internal Shocks' Impact on Macroeconomic Indicators of a Region

Authors:

Leonid A. Serkov

Abstract:

The research aims to examine the influence of external (from the centre and other regions) and internal shocks of supply and demand on the behaviour of economic agents using a compact regional dynamic stochastic general equilibrium model. The author estimates the parameters of the model by the Bayesian method on the statistical data of the economy of the Sverdlovsk oblast. The model under inves‑ tigation is New Keynesian, with rational expectations of economic agents, without cash, with rigid prices and flexible wages. The model considers the following types of agents – households, firms producing intermediate and final product, regional and federal government, and the Central Bank. The distinctive feature of the model is that it introduces social factor of the region as a factor influencing the volume of output, which depends on social expenditures (including health care costs) and expenditures on educa‑ tion and science in the region. Through the functions of impulse response, the author explores the influ‑ ence of simultaneous positive external and internal temporary shocks on some regional variables of the model under study (total consumption, investment, output, real wages, inflation, etc.).

Keywords: region; dynamic stochastic models; supply and demand shocks; social factor; impulse response function.

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For citation: Serkov L.A. Vliyanie vneshnikh i vnutrennikh shokov na makroekonomicheskie pokazateli regiona [The external and internal shocks' impact on macroeconomic indicators of a region]. Izvestiya Uralskogo gosudarstvennogo ekonomicheskogo universiteta – Journal of the Ural State University of Economics, 2018, vol. 19, no. 4, pp. 45−63. DOI: 10.29141/2073-1019-2018-19-4-4