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The Success of Economic Policies in Russia: Dependence on Crude Oil vs. Export Diversification

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  • Elena Kuzmenko

    (Department of Economics, Faculty of Economics and Management, Czech University of Life Sciences Prague; Kamycka 129, 165 21 Prague-6 Suchdol, Czech Republic)

  • Luboš Smutka

    (Department of Economics, Faculty of Economics and Management, Czech University of Life Sciences Prague; Kamycka 129, 165 21 Prague-6 Suchdol, Czech Republic)

  • Mikhail Pankov

    (Department of Statistics and Econometrics, Faculty of Economics and Finance, St. Petersburg State University of Economics; Sadovaya street 21, 191023 St. Petersburg, Russian Federation)

  • Nadezhda Efimova

    (Department of Corporate Finance and Business Valuation, Faculty of Economics and Finance. St. Petersburg State University of Economics; Sadovaya street 21, 191023 St. Petersburg, Russian Federation)

Abstract

In the light of numerous debates around Russia's dependence on crude oil and the necessity to diversify the Russian economy, the present paper investigates how closely federal budget revenues, structure of export basket and GDP growth in Russia are tied up with crude oil prices (POIL) on the one hand and the real effective exchange rate of ruble (REER) on the other. The study covers the period from 2000:Q1 till 2014:Q4 and employs index analysis along with vector error correction model (VECM) based on Johansen co-integration technique. The calculated REER revealed its significant appreciation, that together with a high share of mineral products in total Russian exports points to Dutch disease presence. The constructed econometric models revealed the existence of long-run relationships among the analyzed indicators. Post-estimation tests proved the validity of the VECMs. According to the obtained results, in order to stimulate "non-oil" exports monetary authorities should depreciate national currency, whilst fiscal burden should be mild towards "non oil" producers. However, the observed dynamics of macroeconomic indicators points to the fact that the Russian economy is still substantially influenced by POIL and this influence is much more stronger than it is exerted by fiscal and monetary regulators. It allows us to conclude that crude oil will continue to play, at least in foreseeable future, a dominant role in further development of the Russian economy.

Suggested Citation

  • Elena Kuzmenko & Luboš Smutka & Mikhail Pankov & Nadezhda Efimova, 2017. "The Success of Economic Policies in Russia: Dependence on Crude Oil vs. Export Diversification," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 65(1), pages 299-310.
    • Handle: RePEc:mup:actaun:actaun_2017065010299
    DOI: 10.11118/actaun201765010299
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    References listed on IDEAS

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    1. Bannikov, V., 2006. "Vector Autoregression and Error Correction Models," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 3(3), pages 96-129.
    2. Giordano, Raffaela & Momigliano, Sandro & Neri, Stefano & Perotti, Roberto, 2007. "The effects of fiscal policy in Italy: Evidence from a VAR model," European Journal of Political Economy, Elsevier, vol. 23(3), pages 707-733, September.
    3. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    4. Olivier Blanchard & Roberto Perotti, 2002. "An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(4), pages 1329-1368.
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    Cited by:

    1. Hong, Yanran & Cao, Shijiao & Xu, Pengfei & Pan, Zhigang, 2024. "Interpreting the effect of global economic risks on crude oil market: A supply-demand perspective," International Review of Financial Analysis, Elsevier, vol. 91(C).
    2. Erik Braun & Emese Braun & András Gyimesi & Zita Iloskics & Tamás Sebestyén, 2023. "Exposure to trade disruptions in case of the Russia–Ukraine conflict: A product network approach," The World Economy, Wiley Blackwell, vol. 46(10), pages 2950-2982, October.
    3. Özgür UYSAL & Sultan SAT, 2019. "The Causal Relationship Between Economic Growth and Export: The Case of Russia," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 69(1), pages 43-65, June.
    4. Balashova, Svetlana & Serletis, Apostolos, 2020. "Oil prices shocks and the Russian economy," The Journal of Economic Asymmetries, Elsevier, vol. 21(C).

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