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

22 Pages Posted: 29 Jan 2006

See all articles by Nicola Spatafora

Nicola Spatafora

International Monetary Fund (IMF)

Emil Stavrev

International Monetary Fund (IMF)

Date Written: May 2003

Abstract

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.

Keywords: real exchange rate, Russia

JEL Classification: F4

Suggested Citation

Spatafora, Nikola and Stavrev, Emil, The Equilibrium Real Exchange Rate in a Commodity Exporting Country: The Case of Russia (May 2003). IMF Working Paper, Vol. , pp. 1-22, 2003. Available at SSRN: https://ssrn.com/abstract=879169

Nikola Spatafora (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Emil Stavrev

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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