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

Publication Date:

May 1, 2003

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Link to data for this title

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.

Series:

Working Paper No. 2003/093

Subject:

Exchange rates Foreign exchange Oil prices Prices Production Productivity Real effective exchange rates Real exchange rates

English

Publication Date:

May 1, 2003

ISBN/ISSN:

9781451851670/1018-5941

Stock No:

WPIEA0932003

Pages:

22

Please address any questions about this title to publications@imf.org