Diagnosing Dutch Disease: Does Russia Have the Symptoms?

Abstract

In this paper, we assess whether recent economic developments in Russia are symptomatic of Dutch Disease. We first provide a brief review of the literature on Dutch Disease and the natural resource curse. We then discuss the symptoms of Dutch Disease, which include (1) real exchange rate appreciation; (2) slower manufacturing growth; (3) faster service sector growth; and (4) higher overall wages. We test these predictions for Russia while carefully controlling for other factors that could have led to similar symptoms. We conclude that, while Russia has all of the symptoms, the diagnosis of Dutch Disease remains to be confirmed.

The Impact of Real Oil Price on Real Effective Exchange Rate: The Case of Azerbaijan

“…It is worth to note that this finding is in consistent with my research expectation and in line with findings in case of other oil-exporting countries. For example Cashin (2002) for 22 commodity exporting countries, Koranchelian (2005) for Algeria, Zalduendo (2006) for Venesuela, Issa et al (2006) for Canada, Habib and Kalamova (2007) for Norway, Saudi Arabia and Russia, Oomes and Kalcheva (2007) for Russia, Jahan-Parvar and Mohammadi (2008) for 14 oil-exporting countries, Korhonen and Juurikkala (2009) for 9 OPEC countries. This finding has at least two important implications: the first one is that it supports the existence of a co-integration between real oil prices and real exchange rates, and the Dutch Disease hypothesis.…”

“…Secondly, there are number of empirical studies that investigate impact of oil price on real exchange rate and find positive relationship between them in the oil exporting countries Koranchelian (2005) in Algeria; Zalduendo (2006) in Venezuela; Issa et al (2006) in Canada; Habib and Kalamova (2007) in Norway, Saudi Arabia and Russia, Oomes and Kalcheva (2007) in Russia; Korhonen and Juurikkala (2009) in nine OPEC countries; Jahan-Parvar and Mohammadi (2008) in fourteen oil-exporting countries.…”

“…Thus, based on theoretical framework of Dutch Disease [Corden and Neary (1982), Corden (1984)] and by following above mentioned empirical studies especially Jahan-Parvar and Mohammadi (2008), Koranchelian (2005, Zalduendo (2006), Habib and Kalamova (2007), Oomes and Kalcheva (2007), Korhonen and Juurikkala (2009) I analyze impact of real oil price on real exchange rate of Azerbaijani manat. I have found that there is statistically significant and positive relationship between the real oil price and real exchange rate over the research period.…”

Economic Growth Volatility and Resource Curse: The Role of Financial Development

“…Whilst previous studies have looked at different channels though which natural resource abundance may retard the growth rate in certain countries (Alexeev and Conrad, 2011;Aslaksen, 2007;Corden, 1984;Gylfason, 2004;Gylfason and Zoega, 2006;Harding and Venables, 2013;Hodler, 2006;Isham, Woolcock, Pritchett & Busby, 2005;Mehlum, Moone & Torvik, 2006a, 2006bOomes and Kalcheva, 2007), we are particularly interested in two channels, namely, volatility and financial development. New resource discoveries or sudden changes in the price of a resource commodity can cause changes in the wealth of a country.…”

Drivers of Exchange Rate Dynamics in Selected CIS Countries: Evidence from a Factor-Augmented Vector Autoregressive (FAVAR) Analysis

“…Higher exports of raw materials and soaring inflows of foreign investment raised demand for the CIS currencies, which caused concerns whether this appreciation is sustainable (Oomes andKalcheva, 2007, andÉgert andLeonard, 2008 Égert (2005).…”