Russian Federation: Selected Issues

July 10, 2017

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Russian Federation: Selected Issues, (USA: International Monetary Fund, 2017) accessed December 23, 2024

Summary

This paper focuses on the task that may be more complicated when the adjustment in relative prices is driven by a negative terms of trade (ToT) shock. Two sets of factors are explored: disruptiveness of sudden terms-of-trade driven devaluations and issues related to external demand and access to external markets. The argument that a reduction in commodity prices will unwind the Dutch disease assumes symmetry: since increasing commodity prices drove resources out of the non-commodity tradable sector, decreasing commodity prices and ensuing real depreciation should bring resources back into the nontradable sector. Effectively, this implies that the magnitude of the elasticity of non-commodity exports to the real effective exchange rate (REER) is equal regardless of the direction of the REER movement, and is not affected by the phase of the commodity cycle. Deep linkages between the commodity and non-commodity sectors can prevent the non-commodity tradable sector from taking advance of the depreciation caused by a commodity price shock because such depreciation puts under stress the entire economy.

Subject: Exports, Fiscal federalism, Fiscal policy, Fiscal rules, Inflation, International trade, Oil prices, Prices

Keywords: Commodity exporter, CR, Exports, Fiscal federalism, Fiscal rules, Global, Import price inflation, Inflation, Inflation expectation, Inflation-unemployment trade-off, ISCR, Oil price, Oil prices, Tot shock

Publication Details

Pages:

94
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2017/198
Stock No:

1RUSEA2017002
ISBN:

9781484308202
ISSN:

1934-7685

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