FRB: International Economic Implications of the End of the Soviet Union

International Finance Discussion Papers

International Economic Implications of the End of the Soviet Union
William L Helkie, David H. Howard, and Jaime Marquez
1994-470 (May 1994)

Abstract: This paper quantifies roughly some potential economic developments in the former Soviet Union (FSU), if substantive economic reforms go forward, and assesses the likely implications of these developments for the rest of the world. It is assumed that a move to world prices for energy and other economic reforms result in a significant increase in FSU net oil exports. This paper develops and analyzes several alternative scenarios, including cases in which the FSU is specified to cooperate with OPEC. The simulations reported in this paper indicate that the FSU countries would be major beneficiaries of market reforms, regardless of what happens on the world oil market. However, only in the case in which the world price of oil declines markedly would the countries outside of OPEC notice to any significant extent the macroeconomic consequences of events in the FSU.

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