Give macroeconomic stability and growth in Russia a chance - Harden budgets by eliminating non-payments

Citation
B. Pinto et al., Give macroeconomic stability and growth in Russia a chance - Harden budgets by eliminating non-payments, ECON TRANSI, 8(2), 2000, pp. 297-324
Citations number
36
Language
INGLESE
art.tipo
Article
Categorie Soggetti
Economics
Journal title
ECONOMICS OF TRANSITION
ISSN journal
0967-0750 → ACNP
Volume
8
Issue
2
Year of publication
2000
Pages
297 - 324
Database
ISI
SICI code
0967-0750(2000)8:2<297:GMSAGI>2.0.ZU;2-4
Abstract
This paper identifies and investigates conceptual and empirical links among Russia's disappointing growth performance of the mid-1990s, its costly and eventually unsuccessful stabilization, the macroeconomic meltdown of 1998 and the spectacular rise of non-payments. Non-payments developed into a sys tem that flourished in an atmosphere of fundamental inconsistency between a macroeconomic policy geared at sharp disinflation and a microeconomic poli cy of bailing-out enterprises through soft budget constraints. It embodies a large volume of untargeted, implicit subsidies in the order of 7-10 per c ent of GDP, which has stifled growth, contributed to the 1998 meltdown thro ugh its impact on public debt and made at best a questionable contribution to equity. The overwhelming priority at this point is to dismantle this sys tem, thereby promoting enterprise restructuring and growth (by hardening bu dget constraints) and medium-term macroeconomic stability (by reducing the size of the subsidies). JEL classification: E61, E63, E65, P26.