Russias Macroeconomic Stabilization Revisited

Abstract

Russia muddled through macroeconomic stabilization after late 1993 when a massive amount of credit issue by the Russian central bank stopped and interest rates turned positive. A process-oriented explanation ascribes the lowered inflation rates to the introduction of government bonds that yield incredibly high returns. It makes large commercial banks take an anti-inflationary position. Instead of solely emphasizing the elites strategic choices however, in this article I will look at what political circumstances make these choices available and effective. I associate the macroeconomic stabilization with political opportunity structure for rent-seekers and their collective action dilemma. In this discussion, the 1993 constitutional crisis and subsequent party polarization are emphasized. I also argue that privatized state institutions deprive rent-seekers of the ability to take collective actions as time goes.