Assessing Russia's Non-fuel Trade Elasticities: Does the Russian Economy React 'Normally' to Exchange Rate Movements?

Christian Gianella and Corinne Chanteloup

Post-Communist Economies, 2007, vol. 19, issue 2, 153-166

Abstract: This article attempts to assess the impact of exchange rate movements on Russian import and non-fuel export performance, using an error correction model. The estimation of trade equations shows that long-run price elasticities for imports and non-fuel exports are close to 0.6 and 0.7 respectively, hence relatively similar to those obtained for OECD countries. The Marshall-Lerner condition clearly holds. More precisely, we find that a 10% real appreciation (depreciation) of the currency leads on average to a non-fuel current account deterioration (improvement) of around 1% of GDP. Moreover, the short-term dynamics of the error correction model indicate that the response of the trade balance to exchange rate shocks is rapid, the adjustment being almost complete after one quarter. Finally, the evolution of import prices and non-fuel export prices of Russia, relative to its competitors on domestic and third markets, suggests that by 2004 the Russian economy had already lost the price competitiveness advantage it had gained after the 1998 crisis.

Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/14631370701312063 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Assessing Russia's Non-fuel Trade Elasticities: Does the Russian Economy React "Normally" to Exchange Rate Movements? (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:pocoec:v:19:y:2007:i:2:p:153-166

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CPCE20

DOI: 10.1080/14631370701312063

Access Statistics for this article

Post-Communist Economies is currently edited by Roger Clarke

More articles in Post-Communist Economies from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().