ABSTRACT
This chapter investigates evidence of Dutch disease in Kazakhstan. We assess effects of increasing oil prices on the nominal and real exchange rates of the Kazakh economy. We rely on variants of the monetary approach to the exchange rate to explore the relationship, using a range of empirical real exchange rate models. The estimation results show a possible relationship between the rise in the price of oil and an appreciation of the dollar exchange rate of oil and non-oil sectors. However, the appreciation only infl uences the real effective exchange rate calculated for the whole economy, and it has no systematic effect on the non-oil manufacturing sector. We conclude that thus far, the Kazakh economy has not been affected much by Dutch disease, at least in regard to the competitiveness of non-oil manufacturing.
