DEMUR: A Regional Semi-Structural Model of the Ural Macroregion


DEMUR is a regional semi-structural model that includes a number of the key characteristics of the Ural economy for forecasting and analysis of the impact of monetary policy measures. DEMUR is built in the logic of neo-Keynesian models with real and nominal rigidity. It also takes into account the structure of the small open economy, external (relative to the region) monetary conditions, and other meaningful factors driving economic development in the Ural region. The model estimation is based on Bayesian methods and uses Russian and international statistical data for the period between 2009Q1 and 2020Q4. This paper explains the potential use of DEMUR based on the decomposition of historical and forecasted data. The model enables an analysis of the changes in economic indicators for Russia and for an individual macroregion in response to domestic or external macroeconomic shocks and helps assessing macroregion contribution to changes in country-wide indicators. It is, therefore, a valuable tool for macroeconomic analysis.