Government Stimulus or Economic Incentives?

The authors demonstrate that the recent performance of Russian economy is lagging far behind both targets set by the government and performance of the global economy. Arguments are suggested that possible effects of monetary and fiscal stimulus suggested by some economists most likely will turn to be negative in a medium run. The major macroeconomic and institutional impediments to growth are outlined and policies required to address these obstacles are indicated. The latter include measures to restore macro sustainability, to resolve structural problems, and improving public institutions. Institutional progress requires denationalization (not only in terms of ownership, but also in functional terms, as many mixed and private-owned banks and companies in fact serve as governments' agents), property rights protection, and alleviating excessive regulatory burden on business.