Interregional Integration and Business Cycles Synchronization in the Russian Economic Space

Abstract

The article examines the relationship between the degree of interregional integration of Russian regions and the corresponding national-regional business cycles synchronization based on quarterly statistics on the unemployment rate for 2010–2020. The unemployment rate is used as an indicator of the business cycle. To identify lags and leads between both types of cycles for each region, the Brechling econometric model of the regional unemployment rate is used. Regional integration indices, which are proxy indicators of the strength of interregional interactions, are assessed based on a method using regional annual consumer price indices for 25 groups of goods and services. It is shown that the distribution of integration indices across Russian regions from maximum to minimum has the shape of a plateau with a slight slope, ending with a rather sharp decline on the tail of this distribution. The distribution shows that the lowest degree of interregional integration is observed for the regions of the North Caucasian and Far Eastern federal districts. These federal districts are dominated by regions in which business cycles are poorly synchronized with national ones (which have lags or leads in relation to the latter), while for the business cycles of other Russian regions the absence of such lags and leads is more typical. It is also found that the sensitivity of regional unemployment levels to changes in unemployment at the national level is significantly lower for low-integrated regions compared to relatively highly integrated regions