The Equilibrium Real Exchange Rate in a Commodity Exporting Country: The Case of Russia

May 1, 2003

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The Equilibrium Real Exchange Rate in a Commodity Exporting Country: The Case of Russia, (USA: International Monetary Fund, 2003) accessed September 27, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Questions about external competitiveness, exchange rate misalignment, and the appropriate exchange rate policy feature prominently in the Russian policy debate. This paper furthers the debate by estimating empirically Russia's equilibrium real exchange rate (ERER)-that is, the rate consistent with the long-run economic fundamentals-and sheds light on the extent to which exchange rate policy should be changed. The paper confirms that the ERER reflects both productivity and the terms of trade. It suggests that Russia should target a significant medium-term current account deterioration and a real appreciation perhaps exceeding 10 percent. However, this latter number remains very sensitive to the assumed long-run oil prices.

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

Publication Details

Pages:

22
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/093
Stock No:

WPIEA0932003
ISBN:

9781451851670
ISSN:

1018-5941

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