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

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 AB

7. Calibration Current account of balance of payments - CA Capital account of balance of payments - KA Financial account of balance of payments - FA Consolidated capital and 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 AB 00,575-0,3930,8340-0,1120,78249652,70,042

9. Simulation

11. Krekhovets Ekaterina Many thanks for your attention