Case Study of Russian Economy
Economic activity of a country is related to its internal and external factors. Economies formulate their policies to ensure sustained growth with benefits distributed across all sections of the society is achieved. With more globalized world and enhanced participation of economies in the international markets, it becomes difficult to shell an economy from events taking place on the international stage. Economic distress in one economy tends to affect other economies related to it via trade and political ties. Similarly, growth and development of a country often spreads its positive impacts in the surrounding environment as well. Russia has experienced two economic crises in 1998 and 2008 that had different origins. Poor policies by the government, Asian currency crisis and lack of proper communication regarding future economic plans of the government slid Russia into currency crisis of 1998 (Chiodo & Owyand 2002). In 2008, the financial crisis experienced by Russia was due to a mix of international advancements and poor economic policies of the government.
Write a paper that is designed to provide a detailed analysis of the factors causing these two crises in Russia and provide information on the extent of economic damage caused by them. Furthermore, the duration of these crises should also be explored in detail. A comprehensive analysis on the similarities and differences of these two crises, lessons learned and persistence of mistakes has to be discussed in the paper as well.
World Economy
Assignment
Financial Crises Past and Present
This assignment combines insights from both parts of the course. The assignment aims to enhance your understanding on current economic topics, related to debt or/and banking crises, by looking carefully on similar events from history.
You should choose one country -emerging/developing or industrial- that has experienced a financial crisis over the past decades (e.g., countries of the European periphery, Latin American or East Asian countries that suffered severe banking/currency crises in the 1980s, mid/late 1990s,; or other countries such as Turkey, Russia, Japan, etc).
The assignment aims at uncovering the origins of the latest crisis but also a past crisis and then understanding similarities and differences.
The assignment is thus conceptually to the highly influential work of Carmen M. Reinhart and Kenneth S. Rogoff, who have analysed the similarities of financial crisis over the past centuries.
The assignment consists of the following steps
1. Contemporary Episode
Describe the most recent banking/currency/debt crisis that the country has experienced. Specifically
a. Present some statistics illustrating the severity of the crisis, its duration, and it output costs.
b. Discuss its main origins. List no more than five of the main factors, but focus on the two most important ones. [It may be useful to compare this country with some other similar economies that experienced a crisis during the same period (e.g., East Asian crisis in 199711998; Tequila crisis in the mid-1990s; debt crisis of early 1980s; European crisis in the early 1990)].
2. Past Episode
Using the Reinhart and Rogoff chronology or your knowledge of history repeat the analysis (steps (a) and (b) above) using an earlier crisis in the same country (e.g., you could compare the 1995 crisis in Mexico with the 1850 default of Mexico). It is particularly important to cite the works or data sources that you use in the historical analysis.
3. Comparison and Persistence (40%)
a. Discuss the similarities and differences of the two crises (contemporary with historical).
b. Discuss some mechanisms/channels that may (or may not) explain persistence.
Starting Point References and Bibliography
Reinhart, Carmen M. and Rogoff, Kenneth S., This Time is Different: Eight Centuries of Financial Folly, Princeton University Press, Princeton, NJ, 2009).
Web-sources
• Kenneth Rogoff's web-site: htto://www.kenrogoff.com/
• Barry Eichengreen's web-site: hun://emlab.berkelev.edut-eichenar/
• Alan Taylor's web-site: httn://veoale.vireinia.edu/-amt7u/
• VOXEU web-site: www.voxeu.org
• IMP/World Bank country reports.
Remarks
• Please cite any work (policy report, academic paper, etc) that you use. Please also add hyperlinks to your citations.
• You can use tables from reports or academic papers (assuming proper citation).
• You should not mechanically reproduce some results/insights of others.
• Maximum 12 pages; 1.5 spaced. Including graphs.
• Maximum 5 graphs. (the graphs should be readable; do not shrink them so as to save space)
• No appendix; just bibliography.