The Dutch Desease: A Case of Russian Economy?
- Recent economic recession in Russia raises the question whether it
could be a consequence of the Dutch disease. This thesis attempts to
find out if Russia is sick with Dutch disease. The following symptoms of
the disease are derived from the theoretical model by Corden and
Neary (1982): (A) the appreciation of the real exchange rate; (B) the
contraction of tradable sector and the growth of non-tradable sector; (C)
the overall increase of real wages in the economy. The symptoms are
empirically investigated through analysing the statistical data from
Rosstat and other databases. The results of analysis show that all
examined symptoms of Dutch disease are present in Russia. However,
some of these symptoms could be explained by other factors like rise in
productivity or ‘de-shadowization’ of wages, which could have induced
the same effects on the economy. Nevertheless, all facts indicate a high
risk of Dutch disease presence in Russia. Therefore, the government
and the Bank of Russia should implement the appropriate fiscal and
monetary policies such as expansion of the size of sovereign
stabilization fund and the improvement of its governance as well as
introduction of smart inflation targeting approach.