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Is Russia suffering from Dutch Disease? Cointegration with structural break

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  • Dülger, Fikret
  • Lopcu, Kenan
  • Burgaç, Almıla
  • Ballı, Esra

Abstract

This paper examines whether Russia suffers from “Dutch Disease” by investigating the real appreciation of the Russian ruble and the relative de-industrialization in the post Soviet Union-era. According to UNDP Russia Report (2009) the Russian economy has indeed exhibited some typical symptoms of “Dutch Disease” in recent years as upward movements in oil prices are accompanied by a reduction in the share of manufacturing output and an increase in service prices. Furthermore, the report claims that these developments may trigger a recession in Russia in the future. Using Gregory and Hansen (1996a, 1996b) and Arai and Kurozumi (2007) structural break cointegration frameworks, our results indicate that the Russian economy exhibits some typical symptoms of “Dutch Disease”. Although the diagnosis is not certain, the risk is evident. Hence, policies that would make the Russian economy more robust to shocks in the oil price need to be carefully designed and implemented.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:jrpoli:v:38:y:2013:i:4:p:605-612
    DOI: 10.1016/j.resourpol.2013.09.006
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    3. Fatih Kaplan & Ayşe E. Ünal, 2020. "Industrial Production Index - Crude Oil Price Nexus: Russia, Kazakhstan And Azerbaijan," Economic Annals, Faculty of Economics, University of Belgrade, vol. 65(227), pages 119-142, October –.
    4. Grant Mark Nülle & Graham A. Davis, 2018. "Neither Dutch nor disease?—natural resource booms in theory and empirics," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 31(1), pages 35-59, May.
    5. Xu, Xiaoliang & Xu, Xuefen & Chen, Qian & Che, Ying, 2016. "The research on generalized regional “resource curse” in China's new normal stage," Resources Policy, Elsevier, vol. 49(C), pages 12-19.
    6. Tiba, Sofien, 2019. "Modeling the nexus between resources abundance and economic growth: An overview from the PSTR model," Resources Policy, Elsevier, vol. 64(C).
    7. Nasir, Muhammad Ali & Naidoo, Lutchmee & Shahbaz, Muhammad & Amoo, Nii, 2018. "Implications of oil prices shocks for the major emerging economies: A comparative analysis of BRICS," Energy Economics, Elsevier, vol. 76(C), pages 76-88.
    8. Rahmati, Mohammad H. & Karimirad, Ali, 2017. "Subsidy and natural resource curse: Evidence from plant level observations in Iran," Resources Policy, Elsevier, vol. 52(C), pages 90-99.
    9. Falkowski Krzysztof, 2017. "Long-Term Comparative Advantages of the Eurasian Economic Union Member States in International Trade," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 53(4), pages 27-49, December.
    10. Nasir, Muhammad Ali & Al-Emadi, Ahmed Abdulsalam & Shahbaz, Muhammad & Hammoudeh, Shawkat, 2019. "Importance of oil shocks and the GCC macroeconomy: A structural VAR analysis," Resources Policy, Elsevier, vol. 61(C), pages 166-179.
    11. Sofien Tiba & Mohamed Frikha, 2020. "Africa Is Rich, Africans Are Poor! A Blessing or Curse: An Application of Cointegration Techniques," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(1), pages 114-139, March.
    12. Mironov, Valeriy, 2015. "Russian devaluation in 2014–2015: Falling into the abyss or a window of opportunity?," Russian Journal of Economics, Elsevier, vol. 1(3), pages 217-239.

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    More about this item

    Keywords

    Dutch Disease; Russian economy; Cointegration; Structural break;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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