Transmission Mechanism of Fiscal Policy in Russia: Specific Features and Challenges

This article assesses the transmission mechanism of federal fiscal policy in Russia and the consequences of fiscal stimulus for both the national economy from the federal budget. Understanding the effects and mechanism of fiscal policy transmission, taking into account the specifics of the economic cycle, is crucial for shaping a positive response of Russian economic indicators to changes in fiscal and debt instruments. The purpose of this article is to provide a comprehensive analysis of the channels, features and key problems of the transmission mechanism of fiscal policy in Russia. To achieve this, the following aspects are consistently explored in this work: the specifics of fiscal transmission channels, the impact of fiscal decisions on economic development, and systemic problems that reduce the effectiveness of fiscal impulse transmission. The author defines fiscal transmission and identifies and systematizes its key channels, including the aggregate demand channel (expenditure channel), revenue channel, credit-debt and interest channel, foreign exchange channel and asset channels, as well as the specific impact they have on fundamental economic indicators and the federal budget balance parameters. The greatest attention is paid to the aggregate demand channel, which demonstrates the greatest response to the budget impulse. A study of fiscal transmission mechanisms in the Russian economy found that budget stimulus has a positive economic impact in the relatively short term, while in the long term it worsens lending conditions and contributes to rising inflation expectations, ultimately necessitating a transition to fiscal consolidation. The dominance of fiscal objectives in the tax channel and the high centralization of tax decisions, the priority of federal spending on national defense in the expenditure channel, constant adjustments to the fiscal rule, and the low liquidity of sovereign reserves weaken the positive responses to fiscal impulses and ultimately lead to a slowdown in economic activity. To minimize the negative consequences of the fiscal impulse and enhance its positive impact on the economy, it is necessary to reorient federal spending priorities while strictly enforcing compliance with the fiscal rule, stabilize the tax channel and weaken it to support economic activity, and create sustainable institutional mechanisms for coordinating fiscal and monetary measures.

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