Financial crisis in the Russian Federation: Are the Russians learning to tango?

Abstract

The paper presents some evidence about the rise and fall of financial markets in Russia in the course of 1998, and discusses the causes and likely consequences of the crisis for the Russian economy. It also discusses some important policy issues regarding the effects of global financial integration. The central message is that the Russian financial disaster is a typical example of crisis contagion, although the underlying vulnerability of the economy was a problem which no investor could ignore. In particular, financial stabilization remained extremely fragile owing to the deterioration of the fiscal situation and the vulnerability of the banking system. JEL classification: E44, O16.

Welfare Impacts of the 1998 Financial Crisis in Russia and the Response of the Public Safety Net

“…Then a severe financial crisis hit in August 1998. The crisis combined a devaluation of the rouble, default on both domestic and foreign debts, and a collapse of the stock market (Brown, 1999;Buchs, 1999;Sapit, 1999;Slay, 1999). Several events preceded the crisis.…”

Money demand and inflation in dollarized economies: The case of Russia

“…Buchs (1999),Desai (2000), andKharas et al (2001) provide more discussion on the causes of the 1998 crisis.…”

An agent-based early warning indicator for financial market instability

“…In fact, we observe in our sample the most negative event with a weekly return equal to -18.92% due to the errors of the computerised trading system, which triggered sell orders of an enormous block of stocks as prices fell (Waldrop, 1987). The second optimistic period is detected from March 1997 to August 1998, whose end is found on the last week of August 1998 as a result of the Russian financial crisis (Buchs, 1999) with a negative weekly return of -7%. Another extreme optimistic period in the S&P 500 can be identified, from January to May 2006, in which a down-trend stopped the increase in prices due to a new prospect of further tightening of the monetary policy in USA, Europe and Japan (IMF, 2006).…”