The Russian Triple Crisis 1998: Currency, Finance and Budget
The paper analyzes the Russian currency crisis in August 1998. By critically discussing the existing literature and by descriptively investigating data, the relative importance of economic fundamentals, expectations, structural factors and external causes is assessed. The paper highlights the contradicting requirements on the macroeconomic policy of a transition economy that has a history of inflationary financing. The argument is that none of the previous analyzes has highlighted clearly the triple crisis nature of the events: the crises in the currency and financial markets were inseparably intertwined to the fiscal problems. However, in this emerging market context the budget deficit cannot be stated to be the sole cause in the traditional sense of the so-called first-generation currency crises theories.
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