DOI:
https://doi.org/10.31063/2073-6517/2021.18-4.1
For citation:
Maevsky, V. I. & Rubinstein, A. A. (2021). The Concept of Macro-Economic Policy Based on the Compromise between Inflation and Growth. Zhurnal Economicheskoj Teorii [Russian Journal of Economic Theory], 18(4), 485-496. https://doi.org/10.31063/2073–6517/2021.18–4.1
Abstract:
The article describes a concept of a long-term macro-economic policy based on a compromise between economic growth and inflation that accompanies this growth. This concept differs from the existing theoretical approaches supported by monetary authorities in that it does not rely on the notion of Russia as a small open economy and it does not focus on price volatility as the number one problem in the long-term perspective. The theoretical framework usually used to address the relationship between economic growth and inflation is the Phillips curve and its modifications. In our study, this problem is connected to the phenomenon of non-neutrality of money in the long term.
The analysis uses the simulation model of the shifting mode of reproduction (SMR model) and econometric methods. It is shown that a compromise between economic growth and inflation can be achieved if the long-term monetary policy results in the approximately equal rates of real GDP and inflation. Such monetary policy is possible to realize provided that some important macro-economic conditions are fulfilled, for example, the rouble undervaluation coefficient is reduced, the debt-to-gross-domestic-product ratio is increased, the ratio of international (foreign exchange) reserves to GDP is decreased, and the transition to a fiscal deficit policy is implemented. In other words, a systemic approach is required. This is not an easy way but it will ensure a growth in GDP rates and lower inflation.
Blaug, M. (1994). Ekonomicheskaya mysl’ v retrospective [Economy theory in Retrospect]. Moscow, Russia: Delo LTD, 687. (In Russ.)
Davidson, P. (2006). Postkeynsianskaya shkola v makroekonomicheskoy teorii [The Post Keynesian School]. Voprosy ekonomiki [Voprosy ekonomiki], 8, 82–101. DOI: https://doi.org/10.32609/0042-8736-2006-8-82-101. (In Russ.)
Kirilyuk, I. L. & Sen’ko, O. V. (2020). Vybor modeley optimal’noy slozhnosti metodami Monte-Karlo (na primere modeley proizvodstvennykh funktsiy regionov Rossiyskoy Federatsii) [Selection of Optimal Complexity Models by Methods of Nonparametric Statistics (On the Example of Production Function Models of the Regions of the Russian Federation)]. Informatika i ee primeneniya [Informatics and Applications], 14(2), 111–118. DOI: https://doi.org/10.14357/19922264200216. (In Russ.)
Kozlovtseva, I., Ponomarenko, A., Sinyakov, A. & Tatarintsev, S. (2019). Kontrtsiklicheskaya politika i finansovaya stabil’nost’ v maloy otkrytoy ekonomike strany-eksportera prirodnykh resursov [Countercyclical policy and financial stability in small open economy of natural resource-exporting country]. Seriya dokladov ob ekonomi-cheskikh issledovaniyakh [Economic Research Report Series], 42. Moscow, Russia: The Central Bank of Russian Federation, 83. (In Russ.)
Maevsky, V. I. (2021). O bazovykh predposylkakh ne-neytral’nosti deneg v ekonomicheskoy teorii [On the Basic Preconditions of Non-Neutrality of Money in Economic Theory]. Journal of Institutional Studies, 13(1), 6–19. DOI: http://dx.doi.org/10.17835/2076-6297.2021.13.1.006-019. (In Russ.)
Maevsky, V. I., Malkov, S. Yu., Rubinshteyn, A. A. & Krasil’nikova, E. V. (2020). Teoriya vosproizvodstva kapitala i ne-neytral’nost’ deneg [Theory of capital reproduction and non-neutrality of money]. In Maevsky V. I. (Eds.). Moscow; St Petersburg, Russia: Nestor-Istoriya, 160. (In Russ.)
Maevsky, V. I., Malkov, S. Yu. & Rubinshteyn, A. A. (2019a). Analiz svyazi mezhdu emissiey, inflyatsiey i ekonomicheskim rostom s pomoshch’yu modeli pere-klyuchayushchegosya rezhima vosproizvodstva [Analysis of the relationship between issuing money, inflation and economic growth with the help of the SMR-model]. Voprosy ekonomiki [Voprosy ekonomiki], 8, 45–66. DOI: https://doi.org/10.32609/0042-8736-2019-8-45-66. (In Russ.)
Maevsky, V. I., Malkov, S. Yu., Rubinshteyn, A. A. & Krasil’nikova, E. V. (2019b). Ob odnom napravlenii razvitiya mezoekonomicheskoy teorii [On One Direction of Development of the Mesoeconomics]. Journal of Institutional Studies, 11(3), 21–38. DOI: http://dx.doi.org/10.17835/2076-6297.2019.11.3.021-038. (In Russ.)
Moiseev, S. R. (2018). “Renessans” monetarizma: chem zhila znamenitaya teoriya v 2000–18 godakh [Monetarism’s “renaissance”: How the well-known theorylived in 2000–2018.]. Voprosy ekonomiki [Voprosy ekonomiki], 1, 26–44. DOI: https://doi.org/10.32609/0042-8736-2018-1-26-44. (In Russ.)
Romer, D. (2014). Vysshaya makroekonomika [Advanced Macroeconomics]. In V. M. Polterovich (Eds.). National Research University Higher School of Economics. 2nd Edition. Moscow, Russia: Publishing House of National Research University Higher School of Economics, 855. (In Russ.)
Rubinshtein, A. A. (2020). Rasshirennaya versiya modeli pereklyuchayushchegosya rezhima vosproizvodstva s endogennoy inflyatsiey [Extended version of FCG model with endogenous inflation]. Ekonomika i matemati-cheskie metody [Economics and mathematical methods], 56(4), 43–52. DOI: 10.31857/S042473880012415–5. (In Russ.)
Sinyakov, A. A. & Khotulev, I. M. (2017). Optimal’naya monetarnaya, byudzhetnaya i makroprudentsial’naya politika v strane-eksportere nefti (obzor issle-dovaniy) [Optimal monetary, fiscal and macroprudential policy in an oil exporting economy (a survey)]. Den’gi i kredit [Russian Journal of Money and Finance], 9, 58–66. (In Russ.)
Sinyakov, A. A. & Yudaeva, K. V. (2016). Politika tsentral’nogo banka v usloviyakh znachitel’nykh shokov platezhnogo balansa i strukturnykh sdvigov [Central bank policy under significant balance-of-payment shocks and structural shifts.]. Voprosy ekonomiki [Voprosy ekonomiki], 9, 5–39. DOI: https://doi.org/10.32609/0042-8736-2016-9-5-39. (In Russ.)
Alberola, E. & Benigno, G. (2017). Revisiting the commodity curse: A financial perspective. Journal of International Economics, 108(S1), 87–106.
Bergholt, D. (2014). Monetary Policy in Oil Exporting Economies. Working Papers, 5. Centre for Applied Macro- and Petroleum economics (CAMP). BI Norwegian Business School.
Charnavoki, V. (2010). International risk sharing and optimal monetary policy in a small commodity-exporting economy. New Economic School.
Ferrero, A. & Seneca, M. (2015). Notes on the Underground: Monetary Policy in Resource-Rich Economies. Working Paper, 2.
Fisher, M. E. & Seater, J. J. (1993). Long-run neutrality and superneutrality in an ARIMA framework. American Economic Review, 83(3), 402–415.
Fratzscher, M., Lo Duca, M. & Straub, R. (2018). On the international spillovers of US quantitative easing. The Economic Journal, 128(608), 330–377. DOI: https://doi.org/10.1111/ecoj.12435.
Giacalone, M. & Alibrandi, A. (2015). Overview and Main Advances in Permutation Tests for Linear Regression Models. Journal of Mathematics and System Science, 5(2), 53–59. DOI: http://dx.doi.org/10.17265/2159–5291/2015.02.001.
González, A., Hamann, F. & Rodríguez, D. (2016). Macroprudential Policies in a Commodity Exporting Economy. BIS Paper, 86, 69–73.
Ha, Jongrim & Gene, Kindberg-Hanlon (2021). Asset purchases in emerging markets: Unconventional policies, unconventional times. Global economic prospects. DOI: https://doi.org/10.1596/978–1-4648–1612–3_ch4.
Hofmann, B., Shim, Il. & Shin, Hyun Song (2020). Emerging market economy exchange rates and local currency bond markets amid the Covid-19 pandemic. Bank for International Settlements, BIS Bulletin, 5. IMF. Fiscal Monitor: Policies for the Recovery.
Joyce, M. A., Lasaosa, A., Stevens, I. & Tong, M. (2011). The financial market impact of quantitative easing in the United Kingdom. International Journal of Central Banking, 7(3), 113–161.
Kennedy, P. E. & Cade, B. S. (1996). Randomization tests for multiple regression. Communications in Statistics — Simulation and Computation, 25(4), 923–936.
L´opez-Villavicencio, A. & Mignon, V. (2015). Instability of the Inflation–Output Trade-Off and Time-Varying Price Rigidity. Oxford Bulletin of Economics and Statistics, 77(5), 634–654.
Matousek, R., Papadamou, S. Τ. et al. (2019). The effectiveness of quantitative easing: Evidence from Japan. Journal of International Money and Finance, 99. DOI: https://doi.org/10.1016/j.jimonfin.2019.102068.
Puah, C. H., Habibullah, M. S. & Abu Mansor, S. (2008). On the Long-Run Monetary Neutrality: Evidence from the SEACEN Countries. Journal of Money, Investment and banking, 2, 50–62.
Rebucci, A., Hartley, J. S. & Jiménez, D. (2020). An event study of COVID-19 central bank quantitative easing in advanced and emerging economies. NBER Working Papers, 27339.
Romer, D. (2019). Advanced Macroeconomics. 5th Edition. New York: McGraw-Hill Education.
Can, S., Goel, R. et al. (2020). Effects of Emerging Market Asset Purchase Program Announcements on Financial Markets During the COVID-19 Pandemic. IMF Working Papers, 2020/292.
Sosunov, K. & Zamulin, O. (2006). Can Oil Prices Explain the Real Appreciation of the Russian Ruble in 1998–2005? Working Papers w0083. Center for Economic and Financial Research (CEFIR).
Tang, M. M. J. (2016). A review of the literature on monetary neutrality. MPRA Paper, 70113.
Vegh, C. (2013). Open Economy Macroeconomics in Developing Countries. Massachusetts: The MIT Press, 912.