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Diagnosing Dutch Disease

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Author Info

  • Katerina Kalcheva
  • Nienke Oomes

Abstract

In this paper, we assess whether recent economic developments in Russia are symptomatic of Dutch Disease. We first provide a brief review of the literature on Dutch Disease and the natural resource curse. We then discuss the symptoms of Dutch Disease, which include (1) real exchange rate appreciation; (2) slower manufacturing growth; (3) faster service sector growth; and (4) higher overall wages. We test these predictions for Russia while carefully controlling for other factors that could have led to similar symptoms. We conclude that, while Russia has all of the symptoms, the diagnosis of Dutch Disease remains to be confirmed.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/102.

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Length: 32
Date of creation: 01 Apr 2007
Date of revision:
Handle: RePEc:imf:imfwpa:07/102

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Keywords: Oil; Exchange rates; Natural resources; Economic reforms; exchange rate; real exchange rate; oil prices; oil sector; higher oil prices; real effective exchange rate; effective exchange rate; foreign exchange; crude oil; real exchange rate appreciation; exchange rate appreciation; gas reserves; exchange rate misalignment; oil production; natural gas; nominal exchange rate; oil and gas; opec; oil exports; equilibrium exchange rate; oil products; oil extraction; natural gas reserves; real exchange rate misalignment; oil revenues; exchange rate devaluation; oil producing countries; exchange rate indices; capital flows; proven natural gas; distribution network; real exchange rate depreciation; oil discoveries; foreign investment; oil processing; oil producers; oil market; real exchange rates; oil producing; exchange reserves; petroleum exporting countries; exchange rate targeting; oil-producing countries; nonrenewable resources; exchange rate depreciation; foreign exchange reserves; oil exporters; oil reserves; oil market report; gas exports; oil refineries; crude oil price; gas sector;

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References

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Citations

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Cited by:
  1. Weshah Razzak, . "On the GCC Currency Union," API-Working Paper Series 0910, Arab Planning Institute - Kuwait, Information Center.
  2. Christian Dreger & Jarko Fidrmuc, 2010. "Drivers of exchange rate dynamics in selected CIS countries: Evidence from a FAVAR analysis," Working Papers 289, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
  3. Sosunov, K. & Ushakov, N., 2009. "Determination of the Real Exchange Rate of the Ruble and Assessment of Long-Run Policy of Real Exchange Rate Targeting," Journal of the New Economic Association, New Economic Association, issue 3-4, pages 97-121.
  4. Korhonen, Iikka & Mehrotra, Aaron, 2009. "Real Exchange Rate, Output and Oil: Case of Four Large Energy Producers," BOFIT Discussion Papers 6/2009, Bank of Finland, Institute for Economies in Transition.
  5. Hasanov, Fakhri, 2009. "Analyzing price level in a booming economy: the case of Azerbaijan," MPRA Paper 29555, University Library of Munich, Germany.
  6. Égert , Balázs & Leonard, Carol S., 2007. "Dutch disease scare in Kazakhstan: Is it real?," BOFIT Discussion Papers 9/2007, Bank of Finland, Institute for Economies in Transition.
  7. Fakhri Hasanov, 2010. "The Impact of Real Oil Price on Real Effective Exchange Rate: The Case of Azerbaijan," Discussion Papers of DIW Berlin 1041, DIW Berlin, German Institute for Economic Research.
  8. Balázs Égert, 2013. "Dutch Disease in the Post-Soviet Countries of Central and South-West Asia: How Contagious is it?," EconomiX Working Papers 2013-10, University of Paris West - Nanterre la Défense, EconomiX.
  9. Clemens, Marius & Fuhrmann, Wilfried, 2008. "Rohstoffbasierte Staatsfonds: Theorie und Empirie
    [Resource-based sovereign wealth funds]
    ," MPRA Paper 16933, University Library of Munich, Germany.
  10. Garbis Iradian, 2007. "Rapid Growth in Transition Economies," IMF Working Papers 07/170, International Monetary Fund.
  11. Jiří Sýkora, 2013. "Oil in Timor-Leste: A Ticket to Prosperity?," Acta Oeconomica Pragensia, University of Economics, Prague, vol. 2013(3), pages 68-85.
  12. Charemza, Wojciech & Makarova, Svetlana & Prytula, Yaroslav & Raskina, Julia & Vymyatnina, Yulia, 2009. "A small forward-looking inter-country model (Belarus, Russia and Ukraine)," Economic Modelling, Elsevier, vol. 26(6), pages 1172-1183, November.
  13. Dülger, Fikret & Lopcu, Kenan & Burgaç, Almıla & Ballı, Esra, 2013. "Is Russia suffering from Dutch Disease? Cointegration with structural break," Resources Policy, Elsevier, vol. 38(4), pages 605-612.
  14. Bernardina Algieri, 2011. "The Dutch Disease: evidences from Russia," Economic Change and Restructuring, Springer, vol. 44(3), pages 243-277, August.
  15. Kalyuzhnova, Yelena & Nygaard, Christian, 2009. "Resource nationalism and credit growth in FSU countries," Energy Policy, Elsevier, vol. 37(11), pages 4700-4710, November.

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