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Is Russia suffering from Dutch Disease? Cointegration with structural break

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

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    Article provided by Elsevier in its journal Resources Policy.

    Volume (Year): 38 (2013)
    Issue (Month): 4 ()
    Pages: 605-612

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    Handle: RePEc:eee:jrpoli:v:38:y:2013:i:4:p:605-612
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30467

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    9. Jahan-Parvar, Mohammad R. & Mohammadi, Hassan, 2008. "Oil Prices and Real Exchange Rates in Oil-Exporting Countries: A Bounds Testing Approach," MPRA Paper 13435, University Library of Munich, Germany.
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    17. Oomes , Nienke & Kalcheva, Katerina, 2007. "Diagnosing Dutch disease: Does Russia have the symptoms?," BOFIT Discussion Papers 7/2007, Bank of Finland, Institute for Economies in Transition.
    18. Kejriwal Mohitosh, 2008. "Cointegration with Structural Breaks: An Application to the Feldstein-Horioka Puzzle," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 12(1), pages 1-39, March.
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