Sectoral Real Effective Exchange Rate and Industry Competitiveness in Russia

Irina Bogacheva (), Alexey Porshakov () and Natalia Turdyeva
Additional contact information
Irina Bogacheva: Bank of Russia, Russian Federation
Alexey Porshakov: Bank of Russia, Russian Federation

No wps59, Bank of Russia Working Paper Series from Bank of Russia

Abstract: One of the most popular measures for the economy’s cost competitiveness in foreign trade is the real exchange rate. The common approach to its calculation consists in adjusting the nominal exchange rates for the trade-weighted CPI-based inflation differentials between the domestic economy and its major trade partners. Although such approach is most often used for official statistics, the CPI-based real exchange rate does not accurately capture an economy’s competitiveness in foreign trade. The latter is explained by the fact that the CPI naturally considers price changes for both tradable and non-tradable goods. We aim at constructing a set of alternative indicators of REER that would more extensively account for the structure of the Russian economy and its foreign trade and, hence, provide more reliable estimates of changes in Russian economy's cost competitiveness over time. This is done by taking into an account the structure of the Russian economy combined with the specificities of production processes in industries that are extensively involved in foreign trade, as well as integration of Russian industries into global value chains. Against this background, we also show the importance of distinguishing between the output-based and cost-based real exchange rate concepts when addressing the country’s trade competitiveness issue.

Keywords: Real Effective Exchange Rate; Global Value Chains; Input-Output Tables; Industry Competitiveness (search for similar items in EconPapers)
JEL-codes: F3 F41 F63 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2020-07
New Economics Papers: this item is included in nep-cis, nep-int, nep-opm and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://cbr.ru/Content/Document/File/108668/wp-59_e.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
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:bkr:wpaper:wps59

Access Statistics for this paper

More papers in Bank of Russia Working Paper Series from Bank of Russia Contact information at EDIRC.
Bibliographic data for series maintained by BoR Research ( this e-mail address is bad, please contact ).