Russia : Virtual stabilization and real crisis

Abstract

In 1997 the Russian economy seemed to have overcome inflation and to be poised for economic growth.But as it turned out there was little time to enjoy the fruits of financial stabilization, which was overturned by the 1998 crisis.Some reasons for inconsistencies in the Russian financial stabilization program are analysed here, as well as the conflict between the stability objective of monetary policy and the potentially inflationary budgetary policy that evolved in Russia in 1995-1997.Also discussed are certain trends in macroeconomic performance in 1996-1997 that raised the probability of a financial crisis.