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RUSSIAN BALANCE OF PAYMENTS AND EXCHANGE RATE DYNAMICS: CURRENT ACCOUNT REVERSAL

RUSSIAN BALANCE OF PAYMENTS AND EXCHANGE RATE DYNAMICS: CURRENT ACCOUNT REVERSAL. Krekhovets Ekaterina October 15, 2011. Structure. What is current account reversal? Factors affecting current account reversal

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RUSSIAN BALANCE OF PAYMENTS AND EXCHANGE RATE DYNAMICS: CURRENT ACCOUNT REVERSAL

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  1. RUSSIAN BALANCE OF PAYMENTS AND EXCHANGE RATE DYNAMICS: CURRENT ACCOUNT REVERSAL Krekhovets Ekaterina October 15, 2011

  2. Structure • What is current account reversal? • Factors affecting current account reversal • Model of relationship between balance of payments, reserves, debt flows, exchange rate dynamics • Simulation of current account reversal in Russia

  3. What does current account reversal mean?

  4. Factors • Exchange rate dynamics • Reserves • Capital flows • Assets prices • Exchange regime • Central Bank policy • Oil price

  5. Model

  6. Matrix form of solution A B

  7. Calibration • Current account of balance of payments - CA • Capital account of balance of payments-KA • Financial account of balance of payments-FA • Consolidated capitaland financial account-KAFA • Direct investments-DI • International reserves- IR • Consumer price index in Russia- CPI_rus • Consumer price index for basket -CPI_basket • Real effective exchange rate-REER • Nominal effective exchange rate-NEER • External debts-Debts • Weekly oil prices – POIL • Interest rate on US government bonds - i_us

  8. Results of calibration A B

  9. Simulation

  10. Simulation

  11. Many thanks for your attention Krekhovets Ekaterina

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