A macroeconomic model of Russian transition
We present a model in which capital assets can only be owned by members of a relatively small politically connected elite ('the oligarchs'), each member of which faces a given risk of being expropriated, and we investigate the implications of such an imperfection of property rights for the transition to a market economy. At the start of the transition, the oligarchs are long on local capital assets but short on safe deposits abroad. This causes a depression phase characterized by acute liquidity constraints and large capital outflows at the same time. As the oligarchs acquire enough safe deposits, the economy enters a recovery phase, still accompanied by capital outflows. The model can parsimoniously explain both the steep decline suffered by the Russian economy in the first stage of its transition to a market economy and the subsequent turnaround. The decline could be avoided by allowing foreigners to own some domestic capital assets, but home-country oligarchs may not be able credibly to collectively commit to such a reform. Copyright (c) 2007 The Authors Journal compilation (c) 2007 The European Bank for Reconstruction and Development.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 15 (2007)
Issue (Month): 1 (03)
|Contact details of provider:|| Postal: One Exchange Square, London EC2A 2JN|
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0967-0750
More information through EDIRC
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=0967-0750|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W., 1997.
MIT Press Books,
The MIT Press,
edition 1, volume 1, number 0262522284, March.
- Catherine Hafer, 2006. "On the Origins of Property Rights: Conflict and Productionin the State of Nature," Review of Economic Studies, Oxford University Press, vol. 73(1), pages 119-143.
- Douglas Gollin, 2001.
"Getting Income Shares Right,"
Department of Economics Working Papers
2001-11, Department of Economics, Williams College.
- Gérard Roland & Thierry Verdier, 1999.
"Transition and the output fall,"
The Economics of Transition,
The European Bank for Reconstruction and Development, vol. 7(1), pages 1-28, March.
- Roland, G. & Verdier, T., 1997. "Transition and the Output Fall," DELTA Working Papers 97-09, DELTA (Ecole normale supérieure).
- Roland, Gérard & Verdier, Thierry, 1997. "Transition and the Output Fall," CEPR Discussion Papers 1636, C.E.P.R. Discussion Papers.
- Gerard Roland & Thierry Verdier, 1997. "Transition and the Output Fall," William Davidson Institute Working Papers Series 37, William Davidson Institute at the University of Michigan.
- Ronald Wintrobe, 1998.
"Privatisation, the Market for Corporate Control, and Capital Flight from Russia,"
The World Economy,
Wiley Blackwell, vol. 21(5), pages 603-611, 07.
- Ronald Wintrobe, 1998. "Privatization, the Market for Corporate Control, and Capital Flight from Russia," UWO Department of Economics Working Papers 9804, University of Western Ontario, Department of Economics.
- Karim Abadir & Gabriel Talmain, .
"Depreciation Rates and Capital Stocks,"
98/3, Department of Economics, University of York.
- Jan Svejnar, 2002.
"Transition Economies: Performance and Challenges,"
Journal of Economic Perspectives,
American Economic Association, vol. 16(1), pages 3-28, Winter.
- Leonid Polishchuk & Alexei Savvateev, 2004. "Spontaneous (non)emergence of property rights," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(1), pages 103-127, 03.
- Serguey Braguinsky & Roger Myerson, 2007. "Capital and growth with oligarchic property rights," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(4), pages 676-704, October.
- Terry Sicular, 1998.
"Capital Flight and Foreign Investment: Two Tales From China and Russia,"
The World Economy,
Wiley Blackwell, vol. 21(5), pages 589-602, 07.
- Terry Sicular, 1998. "Capital Flight and Foreign Investment: Two Tales from China and Russia," UWO Department of Economics Working Papers 9803, University of Western Ontario, Department of Economics.
- Andrei Shleifer & Daniel Treisman, 2005. "A Normal Country: Russia After Communism," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 151-174, Winter.
- Konstantin Sonin, 2003.
"Why the Rich May Favor Poor Protection of Property Rights,"
w0022, Center for Economic and Financial Research (CEFIR).
- Sonin, Konstantin, 2003. "Why the rich may favor poor protection of property rights," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 715-731, December.
- Konstantin Sonin, 2002. "Why the Rich May Favor Poor Protection of Property Rights," William Davidson Institute Working Papers Series 544, William Davidson Institute at the University of Michigan.
- Gérard Roland, 2004.
"Transition and Economics: Politics, Markets, and Firms,"
MIT Press Books,
The MIT Press,
edition 1, volume 1, number 026268148x, March.
- Gérard Roland, 2000. "Transition and Economics: Politics, Markets, and Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262182033, March.
- Varese, Federico, 2001. "The Russian Mafia: Private Protection in a New Market Economy," OUP Catalogue, Oxford University Press, number 9780198297369, December.
- Sergei Guriev & Andrei Rachinsky, 2005.
"The Role of Oligarchs in Russian Capitalism,"
Sciences Po publications
info:hdl:2441/1cu21pio6c9, Sciences Po.
When requesting a correction, please mention this item's handle: RePEc:bla:etrans:v:15:y:2007:i:1:p:77-107. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.