Is Natural Resource Rich-Russia Suffering from the Dutch Disease? Cointegration Analyses with Structural Break

Dülger F., LOPCU K., Burgaç A., Ballı E.

Türkiye Ekonomi Kurumu, Uluslararası Ekonomi Konferansı, İzmir, Turkey, 1 - 03 November 2012, pp.1-14

  • Publication Type: Conference Paper / Full Text
  • City: İzmir
  • Country: Turkey
  • Page Numbers: pp.1-14
  • Çukurova University Affiliated: Yes


“Dutch Disease” phenomenon is defined as the discovery of new resources and/or an increase in the price of natural resources which causes the appreciation of the real exchange rate and leads to the decline of manufacturing and ultimately to increases in service prices. According to the UNDP, Russia report 2009, increases in energy income have resulted in the decline of other sectors of the Russian economy. Furthermore, the report claims that these developments may trigger a recession in Russia in the future. In fact, in recent years the Russian economy has exhibited some typical symptoms of “Dutch Disease” along with increases in oil prices accompanied by a reduction in the share of manufacturing output and an increase in service prices. Using Gregory Hansen and Arai-Kurozumi cointegration methods, our results indicate that Russia might in fact be suffering from “Dutch Disease” in the post Soviet Union-era.

Keywords: Dutch Disease, Russian Economy, Cointegration, Structural Break

JEL classification: F14; F31; C22