Lending Credibility: The International Monetary Fund and the Post-Communist Transition
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Book Review Lending Credibility: The International Monetary Fund and the Post-Communist Transition Randall W Stone Princeton University Press: Princeton, 2002 Comparative Economic Studies (2003) 45, 104–108. doi:10.1057/palgrave.ces.8100004
The debate on the IMF’s responsibility for the late 1990s collapse of the Russian economy is a hot and important one in the pages of this journal. The focus of the debate is the now infamous Tashkent Meeting of the heads of Central Banks of the CIS in May 1992. Former Prime Minister Yegor Gaidar accuses the Fund for its pressure on his government to maintain the ruble zone even though the FSU countries that remained loyal to the ruble were milking Russian resources and causing unbearable inflation. According to Gaidar (2002), IMF officials refused to take into account the fact that Russia could not credibly threaten CIS states should they defy Russia and spend ˚ slund (2002), who participated in this conference, gives recklessly. Anders A support to Gaidar. John Odling-Smee and Gonzalo Pastor (2002), both officials at the Fund, defend the Fund and argue that its technocrats merely laid out the options in an objective manner, leaving the ultimate decision on whether to abandon the ruble zone to the Russian political leadership.1 While this debate rages, the broader question of the sources of IMF success and failure across the full range of post-communist cases remains unaddressed. Can a meeting in Tashkent explain the broad range of outcomes? Surely not. This is the task that Randall Stone sets for himself in the book under review. Stone is an exceptionally qualified analyst of postcommunist political economy. His earlier book (Satellites and Commissars: Strategy and Conflict in the Politics of Soviet-Bloc Trade, 1996) explained why the Soviet Union paid such a high financial price to sustain COMECON. In all of his work, he relies on interviews that he conducts in the official state languages, showing a deep understanding of the region and its actors and cultures. He has excellent formal modelling skills such that he can represent political interactions in a game theoretic framework. And his econometric skills allow him to test systematically the observable implications of his formal models. His Lending Credibility is, therefore, a methodologically sound and well-grounded piece of research. 1
2002.
See the symposium ‘The IMF and the Ruble Zone’ Comparative Economic Studies, Winter
Book Review
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The question Lending Credibility asks is whether the IMF has been a positive force in reigning in inflation in the post-communist world, and as a consequence of its reducing inflation, bringing greater growth and equality. Past research using before/after or cross-sectional comparisons have yielded inconclusive results. Worse, findings from these earlier attempts are extremely sensitive to model specifications. Stone takes a different tack, and assumes inter alia that the IMF has an effect on policy even when it is not administering a programme in a pa
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