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Price and Income Elasticities of Russian Exports

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Author Info
Bernardina Algieri
Abstract

The paper gauges export demand elasticities for Russia using an Error Correction technique within a cointegration framework. An extended version of the Imperfect Substitutes Model has been implemented to estimate the sensitivity of Russian exports without oil components to price and to Russian and world income. Our results suggest a robust and negative long run cointegration relationship between the real effective exchange rate, defined as the weighted average of the rouble's exchange rates versus a basket of the three currencies with the largest share in the trade turnover adjusted to incorporate inflation rate differences (the ratio of the domestic price indices to the foreign price indices), and Russian exports. An increase in exports by 24 % is caused by a real depreciation by 10 %. Furthermore, a 10 % growth in world income leads to a 33 % rise in exports. Finally, exports drop by 14 % whenever a 10 % increase in domestic income occurs.

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Publisher Info
Article provided by Cattaneo University (LIUC) in its journal The European Journal of Comparative Economics.

Volume (Year): 1 (2004)
Issue (Month): 2 (December)
Pages: 175-193
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Handle: RePEc:liu:liucej:v:1:y:2004:i:2:p:175-193

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Related research
Keywords: Russia; export demand function; elasticities; cointegration;

Find related papers by JEL classification:
F19 - International Economics - - Trade - - - Other
P27 - Economic Systems - - Socialist Systems and Transition Economies - - - Performance and Prospects
C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions

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    Other versions:
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