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The article considers key factors determining potential output growth in Russia: capital input, labor market and total factor productivity (TFP). Within the framework of potential output analysis, the structural growth is assessed via (1) production function, (2) natural interest rate approach and (3) Okun’s law. The results of authors’models indicate the structural slowdown of Russian economic growth to 0.7—1.3% per year, which stays below consensus view of 1.5%. This deviation is partially explained by the effect of the sanctions against Russia: the results of authors’model suggest that the cost of sanctions totaled 0.3 pp of potential output growth per year.
Orlova et al. (Thu,) studied this question.