مرکز منطقه ای اطلاع رساني علوم و فناوري - Long-term Relationship of Production with Real Effective Foreign Exchange: An Empirical Analysis on Kazakhstan

Abstract :

This study analyzes the long-run relationship between the real effective exchange rate which is based on oil prices and the industrial production index by taking Kazakhstan s economy into consideration. The hypothesis in applied studies is that the exports of basic goods, which lead to the appreciation of real effective exchange rate, causes a decline in non-tradable goods sectors or, in general, the hypothesis is analyzed in relation to the production volume of the economy relative to these real effective exchange rates. With this knowledge in the literature, this study analyzes the validity of the hypothesis of the Dutch Disease as an economy based on export of natural resources for the Kazakhstan Economy. This study conducted new techniques that are used for regression models in order to test co-integration allowing for multiple breaks. In addition, the robustness test was applied for the empirical findings. This work provides relevant literature a contribution because it deals with the Kazakh economy using new techniques. When the data and the period taken into consideration, it is found that the The Dutch Disease hypothesis is valid for Kazakhstan Economy. Especially, it can be said that the implementation of a support policy that attaches importance to the diversity of the sector and the diversity of goods in production is essential for Kazakhstan. In addition depending on these empirical findings, decline in energy prices will have a negative impact on economic growth.