The wild ride of the ruble

William Easterly, Holger C. Wolf

    Research output: Contribution to journalArticlepeer-review


    The ruble exchange rate has undergone wide gyrations over the last few years, culminating in a period of rapid appreciation in early 1995. We examine this period, distinguishing between two alternative views, an overshooting view with backward looking expectations, and a portfolio model based on demand for ruble assets. We show that sturdy lag structures between inflation and monetary growth imply that the two models are observationally equivalent in the short run. Using indirect information from other asset markets, however, allows us to differentiate between the two explanations. We find fairly sturdy evidence that expectations regarding future inflation shifted downward in early 1995, suggesting that the subsequent increase in monetary growth to a significant extent satisfied increased real ruble demand, with limited inflation impact.

    Original languageEnglish (US)
    Pages (from-to)251-261
    Number of pages11
    JournalInternational Journal of Finance and Economics
    Issue number4
    StatePublished - 1996


    • Exchange rate
    • Inflation
    • Interest rate
    • Ruble
    • Stabilization

    ASJC Scopus subject areas

    • Accounting
    • Finance
    • Economics and Econometrics


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