Financial crisis of 1998 in Russia: origins and outcomes

Abstract

The article is devoted to the analysis of the Russian crisis of 1998. Internal and external causes of the crisis are examined, as well as its specifics in financial and real sectors of the economy and key consequences. It is claimed that the crisis was deeply connected with main features of transformational recession in the transitional Russian economy, and its roots could be found in conducted macroeconomic policy. Internal causes of the crisis have aroused in monetary and fiscal spheres. It was nonoptimality of monetary policy that led to further demonetization and long-lasting keeping up of too high exchange rate. These factors predetermined the aggravation of slack in industry and galloping contraction of the balance of payments. Forming of non-payments system in the economy resulted in the drop in tax revenues of the budget and creation of debt pyramide, collapse of which triggered the crisis. External causes were linked with Asian crisis and its echoes: fading of conjuncture on global commodities markets and reversal in international capital flows. Speaking about outcomes, crisis is analyzed as banking, debt and currency crisis. The author identifies major mechanisms in revitalization stage and basic characteristics of post-crisis growth in recovery period.