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A Golden Rule for Russia? How a Rule-Based Fiscal Policy Can Allow a Smooth Adjustment to the New Terms of Trade

  • Christian Gianella

The Russian economy continues to grow strongly, buoyed by rising terms of trade, which, in turn, are supporting a boom in domestic consumption. This paper addresses the challenge that the adjustment to sustained high oil prices poses for macroeconomic management. It first examines the impact of rising terms of trade on the domestic economy, particularly with respect to exchange-rate appreciation, competitiveness and inflation. It then considers the role of monetary and fiscal policies in ensuring a smooth adjustment to the higher terms of trade. The paper argues that fiscal policy should be the primary instrument for tackling this challenge. It therefore focuses on the potential role of a fiscal rule in insulating the economy and the budget from commodity-price fluctuations, and on the management of windfall oil and gas revenues accumulated in the fiscal Stabilisation Fund. Une règle d'or pour la Russie? Comment une politique budgétaire fondée sur des règles peut permettre un ajustement en douceur aux nouveaux termes de l'échange. L’économie russe continue de croître à un rythme élevé, bénéficiant d’une amélioration prolongée des termes de l’échange qui alimente la forte hausse de la consommation intérieure. Cette étude analyse le défi que l’adaptation à des prix du pétrole durablement élevés suscite en termes de gestion macroéconomique. Il examine d’abord les conséquences de l’augmentation des termes de l’échange sur l’économie nationale, en particulier son impact sur l’appréciation du taux de change, la compétitivité et l’inflation. Il analyse ensuite le rôle que les politiques monétaire et budgétaire peuvent jouer pour garantir un ajustement en douceur à cette augmentation des termes de l’échange. Le chapitre conclut que la politique budgétaire devrait être l’instrument à privilégier pour réaliser cet ajustement. Enfin, l’étude considère le rôle que peuvent potentiellement jouer des règles budgétaires pour mettre l’économie et le budget à l’abri des fluctuations des prix des matières premières, et se concentre sur la gestion des recettes pétrolières et gazières exceptionnelles transférées dans le Fonds de stabilisation.

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 537.

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Date of creation: 15 Jan 2007
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Handle: RePEc:oec:ecoaaa:537-en
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