The Risks of Domestic Debt Expansion

Andrey Vavilov

Chapter 4 in The Russian Public Debt and Financial Meltdowns, 2010, pp 121-143 from Palgrave Macmillan

Abstract: Abstract As we have seen, the anti-inflationary monetary policy pursued in 1995–96 succeeded in reducing the level of inflation. A stabilization of inflationary expectations occurred in the second half of 1995 thanks to monetary policy tightening and the nominal anchor regime. But this stabilizing effect was not enough to reduce the real interest rates that soared due to constrained liquidity supply, the expansion in government debt, and the banking crisis of Summer 1995. From early 1996, the factor of political uncertainty sharply raised the risk premium in yields of domestic financial instruments.

Keywords: Real Interest Rate; Public Debt; Capital Inflow; Government Debt; External Debt (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-28208-7_5

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DOI: 10.1057/9780230282087_5

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