The Equilibrium Real Exchange Rate in a Commodity Exporting Country: The Case of Russia
IMF Working Papers, May 1, 2003
Source details
- Canonical URL
- The Equilibrium Real Exchange Rate in a Commodity Exporting Country: The Case of Russia
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Bibliographic details
- Authors: Nikola Spatafora, Emil Stavrev
- Published: May 1, 2003
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451851670.001
Summary and research question
- Questions about external competitiveness, exchange rate misalignment, and the appropriate exchange rate policy feature prominently in the Russian policy debate.
- The paper estimates empirically Russia's equilibrium real exchange rate (ERER) — the rate consistent with the long-run economic fundamentals — and sheds light on the extent to which exchange rate policy should be changed.
Key findings and conclusions
- The paper confirms that the ERER reflects both productivity and the terms of trade.
- The analysis suggests that Russia should target a significant medium-term current account deterioration.
- The analysis suggests a real appreciation perhaps exceeding 10 percent.
- The estimate of a real appreciation "perhaps exceeding 10 percent" remains very sensitive to the assumed long-run oil prices.
Policy implications
- Exchange rate policy should take into account long-run fundamentals, including productivity and terms of trade.
- Policymakers should anticipate and plan for a significant medium-term current account deterioration as part of ERER-consistent adjustment.
- Projected required real appreciation magnitudes depend critically on assumptions about long-run oil prices; therefore, policy guidance should incorporate oil price scenarios and their uncertainty.
Subject classification and keywords
- Subject: Exchange rates, Foreign exchange, Oil prices, Prices, Production, Productivity, Real effective exchange rates, Real exchange rates
- Keywords: Africa, appreciation, competitiveness indicator, depreciated real exchange rate, equilibrium RER, Exchange rates, Oil prices, price, Productivity, Real effective exchange rates, real exchange rate, Real exchange rates, RER appreciation, Russia, transition economy, world energy price, WP
Content in this bundle
- The Equilibrium Real Exchange Rate in a Commodity Exporting Country: The Case of Russia - WP/03/93