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The Russian triple crisis 1998: currency, finance and budget

Author

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  • Venla Sipilä

    (UCL School of Slavonic and East European Studies)

Abstract

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.

Suggested Citation

  • Venla Sipilä, 2002. "The Russian triple crisis 1998: currency, finance and budget," UCL SSEES Economics and Business working paper series 17, UCL School of Slavonic and East European Studies (SSEES).
    • Handle: RePEc:see:wpaper:17
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    References listed on IDEAS

    as
    1. Eichengreen, Barry, 1999. "Kicking the Habit: Moving from Pegged Rates to Greater Exchange Rate Flexibility," Economic Journal, Royal Economic Society, vol. 109(454), pages 1-14, March.
    2. Niko Gobbin & Bruno Merlevede, 2000. "The Russian Crisis: A Debt Perspective," Post-Communist Economies, Taylor & Francis Journals, vol. 12(2), pages 141-163.
    3. Maurice Obstfeld, 1994. "The Logic of Currency Crises," NBER Working Papers 4640, National Bureau of Economic Research, Inc.
    4. Olga Butorina, 2000. "Implications of the Russian Crisis," Post-Communist Economies, Taylor & Francis Journals, vol. 12(4), pages 409-424.
    5. Allan Drazen & Elhanan Helpman, 1987. "Stabilization with Exchange Rate Management under Uncertainty," NBER Working Papers 2268, National Bureau of Economic Research, Inc.
    6. Mr. Sergei V. Alexashenko & Mr. Augusto López-Claros, 1998. "Fiscal Policy: Issues During the Transition in Russia," IMF Occasional Papers 1998/006, International Monetary Fund.
    7. repec:imf:imfops:1995/005 is not listed on IDEAS
    8. Flood, Robert & Marion, Nancy, 1999. "Perspectives on the Recent Currency Crisis Literature," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 4(1), pages 1-26, January.
    9. Carmen M. Reinhart & Graciela L. Kaminsky, 1999. "The Twin Crises: The Causes of Banking and Balance-of-Payments Problems," American Economic Review, American Economic Association, vol. 89(3), pages 473-500, June.
    10. Nikolic, Milan, 2000. "Money Growth-Inflation Relationship in Postcommunist Russia," Journal of Comparative Economics, Elsevier, vol. 28(1), pages 108-133, March.
    11. Obstfeld, Maurice, 1996. "Models of currency crises with self-fulfilling features," European Economic Review, Elsevier, vol. 40(3-5), pages 1037-1047, April.
    12. Ms. Nancy P. Marion & Mr. Robert P Flood, 1998. "Perspectiveson the Recent Currency Crisis Literature," IMF Working Papers 1998/130, International Monetary Fund.
    13. Allan Drazen & Elhanan Helpman, 1987. "Stabilization with Exchange Rate Management," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(4), pages 835-855.
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