DEMUR, a regional semi-structural model of the Ural Macroregion

Kryzhanovskiy O., Zykov A.

We give a brief introduction to the new macroeconomic model of the Ural economy called DEMUR (Dynamic Equilibrium Model of Ural Region). DEMUR is a regional semi-structural model that includes some of the main characteristics of the Ural economy. This allows us to analyze the effects of monetary policy and forecast macroeconomic indicators. DEMUR is built in the logic of Neo-Keynesian models with real and nominal rigidity. The model considers the structure of the small open economy, external monetary conditions and some other factors.

Model coefficients are evaluated using Bayesian methods. We used OECD, EAI, FRED, FAO data on international statistics, Rosstat and CBR data on Russian federal and regional statistics for 2009Q1-2020Q4. We show the potential of DEMUR by decomposing historical and forecast data. The model allows to analyze changes in the indicators of the economy of Russia and a separate macroregion in response to internal or external macroeconomic shocks. The model evaluates the contribution of the macroregion to the change in country indicators and the contribution of the country indicators to the change in macroregion indicators. The presented model can be used as a valuable tool of macroeconomic analysis.

DEMUR, a regional semi-structural model of the Ural Macroregion