Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/308272 
Year of Publication: 
2022
Citation: 
[Journal:] Review of World Economics [ISSN:] 1610-2886 [Volume:] 159 [Issue:] 1 [Publisher:] Springer [Place:] Berlin, Heidelberg [Year:] 2022 [Pages:] 185-214
Publisher: 
Springer, Berlin, Heidelberg
Abstract: 
Russian monetary policy has been challenged by large and continuous private capital outflows and a sharp drop in oil prices during 2014. Both contributed to significant depreciation pressures on the ruble and led the central bank to give up its exchange rate management strategy. Against this background, this work estimates a small open economy model for Russia, featuring an oil price sector and extended by a specification of the foreign exchange market to correctly account for systematic central bank interventions. We find that shocks to the oil price and private capital flows substantially affect domestic variables such as inflation and output. Simulations for the estimated actual strategy and alternative regimes suggest that the vulnerability of the Russian economy to external shocks can substantially be lowered by adopting some form of inflation targeting. Strategies to target the nominal exchange rate or the ruble price of oil prove to be inferior.
Subjects: 
Monetary policy
Exchange rate interventions
Oil price
Capital flows
JEL: 
E52
F31
F41
G15
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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