Financial Sector’s Role in Transmission of Monetary and Fiscal Shocks in Russian Economy: Estimation Under Different Assumptions About Production Sector

The financial sector plays a crucial role in the economy, not only being simple intermediary between creditors and borrowers, but also having significant impact on economy’s development its various characteristics. For this reason, accounting for peculiarities is critical when developing policy-oriented general equilibrium models practical use. This drives interest of many researchers approaches to describing frictions DSGE models. In one can describe production side economy simplistic way. However, it could be important model more detail. instance, separating tradable non-tradable sectors great significance, especially economies which depend foreign trade lot. paper we analyze how transmission monetary fiscal shocks under different assumptions about sector. Namely, compare two-sector with assumes that produces goods. According results, nontradable asymmetrically. effect quantitatively smaller than one-sector economy. Therefore, using latter simplifying assumption lead overestimating shocks. addition, provides estimates changes policy instruments Russian given existence frictions.