The Interaction between Oil Price and Basic Macroeconomics Indicators: Evidences from Russia

  • Dmitry V. Rodnyansky
Keywords: Russia, Oil Price, GDP, Inflation Rate, Unemployment Rate, VECM


This study empirically analyzes the causation
between GDP, unemployment rate, inflation and oil
price in through analyzing Russian quarterly data
from 2005:Q1 to 2014:Q3 and employing Vector
Error Correction (VECM). The main findings of the
paper are in line with general theory and are as
follows: i) changes in oil prices in direct ratio
affect the level of production, in other words
increase in hydrocarbon cost pushes Russian
economy up, ii) high oil price, among other things,
causes the unemployment rate in Russia to decline,
iii) in the short run, inflation favorably, but weakly
influences the level of production as well as
employment in Russia, iv) unemployment rate in
Russia, as expected, has adverse impact on the total
output level, v) in accordance with error correction
terms GDP and unemployment rate needs about 3
quarters to return to the equilibrium level after the
structural changes. Based on the results, some policy
recommendations are presented.