The Impact of Monetary Policy on Economic Activity in the Regions of the Russian Federation

Russia belongs to a group of countries with high regional heterogeneity. Regions have a different economic structure, a different proportion of industries and sectors. Since economic activity is concentrated in places with an economic advantage, the problem of regional disproportion arises. Therefore, there may be an asymmetric reaction of the regions to the policy implemented by the Central Bank, namely, to a change in the interest rate. Consequently, the problem of existing heterogeneity in the response of regions to a single monetary policy remains unresolved in Russian practice and requires more careful study. The purpose of the work is to identify the presence of (in)homogeneity in regional responses to the unified monetary policy in the Russian Federation, as well as to analyze the reaction of indicators of economic activity of regions in conditions of established (a)symmetry. The paper analyzes the asymmetry of regional response to monetary policy shocks. Using vector autoregression models, the analysis was carried out at the country level. Next, cluster analysis of regions was implemented using the k-means method and panel data and Bayesian vector autoregression models were constructed. Regional heterogeneity in the response of regions to the monetary shock was revealed. It was found that industry composition, agglomeration effect, share of SMEs in the gross regional product of the region and export orientation affect the sensitivity of the region to the monetary policy shock. The practical significance of the obtained results lies in the possibility of their use for the development of strategic decisions of the Central Bank and the Government of the Russian Federation, as the interaction between monetary and fiscal policies is even more important in conditions of regional heterogeneity.