Regional real exchange rates and growth: Evidence from resource-based regional economies

摘要

Regional economies in emerging countries vary greatly in terms of their global integration. External shocks, therefore, require adjustment mechanisms that reflect local conditions. This paper focuses on the role of real exchange rates (RER) in the economic performance of regions. In particular, we use monthly data to construct RER for 77 Russian regions over the period 2000-2016. The results validate the adoption of a regional perspective by showing nontrivial differences across regions. Oil-producing and resource-based regional economies experienced much larger RER movements and higher volatility. Overall, RER appreciated steadily until a major drop in 2008, and then, again in 2014. Growth regressions show that RER depreciations have a stimulating effect on regional performance but only in the short run. These results confirm previous findings indicating that RER are a key facilitating factor but not a major determinant of growth and are thus unlikely to produce sustainable development.