Simulating Russia’s Challenging Transition

Seth G. Benzella, Eugene Goryunov,b Maria Kazakovac, Guillermo Lagardad, Kristina Nesterovae, Laurence J. Kotlikofff, and Andrey Zubarevg

This paper develops a large-scale, dynamic life-cycle model to simulate Russia’s demographic and fiscal transition under favorable and unfavorable fossil-fuel price regimes. The model includes Russia, the U.S., China, India, the EU, and Japan+ (Japan plus Korea). The model predicts dramatic increases in tax rates in the U.S., EU, India, and Russia. Indeed, the increases are so large as to question their political feasibility let alone their actual collection given the potential for tax avoidance and evasion.

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