The Spillover Effects of Quantitative Easing in the United States for Russian Economy. Macroeconometric Analysis

The paper reviews recent episodes of quantitative easing in the United States and associated internal and external transmission mechanisms. On the basis of the Vector Error Correction Model (VECM) specific features of transmission for the Russian economy are revealed. The U.S. active balance monetary policy maintains oil prices at a high level, which allows Russian economy to grow at relatively high rate. However, if current economic policy in Russia unchanged, unchanged it conserves further existing model of economic growth making it unstable to external shocks and ineffective in the long-run. Thus, cancellation of the U.S. quantitative easing will cause sharp fall (severe recession) in growth rate of the Russian economy, slow recovery and only a very gradual improvement in the structure of production.