The Model of the Production Side of the Russian Economy

Abstract

We consider the model of the production side of the Russian economy. This model is derived as the solution of the nonlinear dynamic optimization problem of the macroeconomic agent we call Producer. This agent maximizes his discounted profit flow under technologic, demographic and financial constraints. We use the method of relaxation of complementary slackness conditions to transform the model to the more regular one and evaluate its parameters on the Russian macroeconomic data. We show that this model can successfully replicate the large set of Russian macroeconomic indicators such as gross domestic product, loans of producers, volume of fixed assets etc.