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Foreign trade relations of Russia under unstable economic environment

Author

Listed:
  • Yurij Yur'evich Ponomarev

    (The Institute of Applied Economic Research at the Russian Presidential Academy of National Economy and Public Administration, Moscow, Russia; Gaidar Institute for Economic Policy, Moscow, Russia)

  • Aleksej Igorevich Rej

    (The Institute of Applied Economic Research at the Russian Presidential Academy of National Economy and Public Administration, Moscow, Russia)

  • Dar'ja Maksimovna Radchenko

    (The Institute of Applied Economic Research at the Russian Presidential Academy of National Economy and Public Administration, Moscow, Russia)

Abstract

This study analyzes the interaction of intensity of bilateral trade in goods and volatility of pair- wise exchange rates between Russia and its major trade partners, as the bulk of existing economic literature considers only the one-side causal link from exchange rate volatility to trade in goods. The paper finds that, on the one hand, exchange rate volatility has no statistically significant impact on the intensity of trade relations with Russia’s major trading partners, yet, on the other hand, a 1% increase in average trade intensity with a country results in a 0.3% drop in volatility of real effective exchange rate. Moreover, the authors have empirically determined the most important channels influencing real exchange rate volatility: the credit channel (Intercountry short-term debt flows), the macrotrade channel (intensity of trade between two countries), and the micro- structural channel (a measure of variance - standard deviation - of export transaction volume).

Suggested Citation

  • Yurij Yur'evich Ponomarev & Aleksej Igorevich Rej & Dar'ja Maksimovna Radchenko, 2018. "Foreign trade relations of Russia under unstable economic environment," Russian Foreign Economic Journal, Russian Foreign Trade Academy Ministry of economic development of the Russian Federation, issue 3, pages 57-74, March.
    • Handle: RePEc:alq:rufejo:rfej_2018_03_57-74
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