Hoover Daily Report
Analysis and Commentary
Analysis and Commentary

Can More Liberal Subsidies Spur Growth and Reduce Inflation?

by Alvin Rabushka, Michael S. Bernstamvia russianeconomy.org
Wednesday, April 25, 2001

A remarkable consensus has recently surfaced among Russian policy makers, from the President on down, and Western observers and investors. They are concerned about rising inflation and slowing growth. As a remedy, they advocate larger subsidies. Alas, simple accounting arithmetic shows that liberalization of capital outflow cannot achieve the desired objectives of higher growth and lower inflation.