2005/10/03 by Brian Pinto, E. Gurvich, Sergei Ulatov · 1 citation
Economics, Econometrics and Finance · Social Sciences · #Global Financial Crisis and Policies #Russia and Soviet political economy #Fiscal Policies and Political Economy #Restructuring #Market liquidity #Moral hazard #Inflation (cosmology) #Debt restructuring #Abandonment (legal) #Debt #Financial crisis #Economics #Financial system #Exchange rate #Lender of last resort #Business #Economic policy #Finance #Monetary economics #Political science #Central bank #Macroeconomics #Monetary policy #Sovereign debt #Market economy #Incentive
paper · doi:10.1017/cbo9780511510755.012
openalex publication_date 2005/10/03 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/30
: This case study covers events from mid-1995, when Russia's quest for single-digit inflation began, to the end of 2002. The focus is on Russia's 1998 crisis and subsequent recovery. These events offer valuable lessons for countries facing simultaneous problems of unsustainable public debt dynamics and low international liquidity – a list that in recent years has included Argentina, Brazil, and Turkey. Lessons include implications for the appropriate design of rescue packages, moral hazard, and factors driving postcrisis recovery. This study presents a framework that may make it possible to distinguish between a first-generation and second-generation crisis by juxtaposing economic fundamentals and market signals. This could help in making the judgment about whether a soft landing scenario supported by the announcement of a fiscal-structural reforms package and liquidity injections from the international financial institutions (IFIs) is feasible, or whether the abandonment of the exchange rate target and even a possible debt restructuring may be unavoidable. THE RUSSIAN MELTDOWN: IMPLICATIONS FOR OTHER CRISIS EPISODES In February 1998, Russia attained its goal of single-digit inflation set under the stabilization program that began in mid-1995. Only six months later, it experienced a comprehensive macroeconomic collapse, involving its exchange rate, the banking system, and public debt. This occurred soon after a large rescue plan put together by the international financial institutions (IFIs) took effect.