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Oil dependency of the Russian economy: An econometric analysis

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  • Benedictow, Andreas
  • Fjærtoft, Daniel
  • Løfsnæs, Ole

Abstract

A macro econometric model of the Russian economy is tailored to analyze the effects of changes in the oil price and alternative fiscal policies. Model simulations indicate that the Russian economy is vulnerable to large fluctuations in the oil price, but we also find evidence of significant economic growth capabilities in the absence of oil price growth. A higher oil price not only leads to higher economic growth and savings in the sovereign wealth fund, but also induces a rupture in the Russian economy. Public spending and household spending increase while the traditional export industries suffer from real appreciation, in line with the Dutch disease hypothesis. We also show that alternative policies for spending of the petroleum income may have considerable consequences for economic growth, the degree of crowding out of traditional export industries and wealth accumulation in the fund.

Suggested Citation

  • Benedictow, Andreas & Fjærtoft, Daniel & Løfsnæs, Ole, 2013. "Oil dependency of the Russian economy: An econometric analysis," Economic Modelling, Elsevier, vol. 32(C), pages 400-428.
    • Handle: RePEc:eee:ecmode:v:32:y:2013:i:c:p:400-428
    DOI: 10.1016/j.econmod.2013.02.016
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    More about this item

    Keywords

    Russia; Macro econometric model; Oil price dependency; Fiscal and monetary policies; Dutch disease;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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