NDLI: The Dutch Disease: evidences from Russia

Content Provider	Springer Nature Link
Author	Algieri, Bernardina
Copyright Year	2011
Abstract	The present study examines whether the Russian economy exhibits the symptoms of the Dutch Disease over the transition period begun in the early 1990s. Five warning signs have been detected, namely, a real exchange rate appreciation (1); a flourishing economic situation pushed by higher oil prices (2); a relative de-industrialisation (3); an export reduction in the non-booming-sector (4) and a real wage growth (5). The first three symptoms are estimated simultaneously in a VECM dimension. The results suggest the existence of three long-run cointegrating vectors, thus confirming the presence of the first three symptoms. Specifically, a 10% oil price shock leads to a real appreciation by 4%, a rise in GDP by 3% and a decline in domestic manufacturing production vis-à-vis service production by another 3%. Finally, a number of manufacturing exports have been crowded out and real wages have recorded important increases. To a certain extent, this corroborates the presence of symptom 4 and 5. The paper concludes that the risk of the Dutch Disease exists, and two preventive thrusts of action could be undertaken to reduce its threat: namely to diversify the economy and to hold back the appreciation of the exchange rate through targeted fiscal and monetary policies. These instruments would render Russia less vulnerable to exogenous shocks.
Starting Page	243
Ending Page	277
Page Count	35
File Format	PDF
ISSN	15739414
Journal	Economic Change and Restructuring
Volume Number	44
Issue Number	3
e-ISSN	15740277
Language	English
Publisher	Springer US
Publisher Date	2011-03-08
Publisher Place	Boston
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Dutch Disease Oil price VECM analysis Development Economics Economic Growth Macroeconomics/Monetary Economics International Economics Economic Policy Economic Systems
Content Type	Text
Resource Type	Article
Subject	Economics and Econometrics

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