Russia from Bust to Boom: Oil, Politics or the Ruble?

Bruno Merlevede, Koen Schoors and Bas van Aarle

Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration

Abstract: This paper develops and estimates a small macroeconomic model of the Russian economy. The model is tailored to analyze the impact of the oil price, the exchange rate, private sector confidence and fiscal policy on economic performance. The model does very well in explaining Russia’s recent economic history in the period 1995-2004. Simulations suggest that the Russian economy is vulnerable to downward oil price shocks. We substantiate two mechanisms that mitigate the economic effects of oil price shocks, namely the stabilisation brought by the Oil Stabilisation Fund and the Dutch disease effect. The negative effect of a shock in private sector confidence on real GDP is comparable to the effect of an oil price shock, although the transmission of both shocks runs along different channels. The fiscal policies of the Putin administration temper economic fluctuations caused by oil price shocks, but it remains to be seen whether these policies will be continued.

Keywords: Russia; Macroeconomic Modeling; Macroeconomic stabilization (search for similar items in EconPapers)
JEL-codes: C70 E16 E17 E58 E63 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2007-04
New Economics Papers: this item is included in nep-cba, nep-cis, nep-ene, nep-mac and nep-tra
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http://wps-feb.ugent.be/Papers/wp_07_461.pdf (application/pdf)

Related works:
Working Paper: Russia from Bust to Boom: Oil, Politics or the Ruble? (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:07/461

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