BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 3/2015:
Discovering the signs of Dutch disease in Russia
V.V. Mironov ()
and A.V. Petronevich ()
Abstract: This paper examines the problem of Dutch disease in Russia
during the oil boom of the 2000s, from both the theoretical and empirical
points of view. Our analysis is based on the classical model of Dutch
disease by Corden and Neary (1982). We examine the relationship between
changes in the real effective exchange rate of the ruble and the evolution
of the Russian economic structure during the period 2002 – 2013. We
empirically test the main effects of Dutch disease, controlling for
specific features of the Russian economy, namely the large role of
state-owned organizations. We estimate the resource movement and spending
effects as determined by the theoretical model and find the presence of
several signs of Dutch disease: the negative impact of the real effective
exchange rate on growth in the manufacturing sector, the growth of total
income of workers, and the positive link between the real effective
exchange rate and returns on capital in all three sectors. Although also
predicted by the model and clearly observable, the shift of labor from
manufacturing to services cannot be explained by ruble appreciation
alone.
Keywords: Dutch disease; resource curse; real effective exchange rate; cointegration model; economic policy; Russia; (follow links to similar papers)
JEL-Codes: C32; F41; F43; (follow links to similar papers)
54 pages, January 19, 2015
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