Banking. Inflation (I). Causes, socio-economic consequences and methods of regulation. Features of inflation in Russia (the most important)

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Banking. Inflation (I). Causes, socio-economic consequences and methods of regulation. Features of inflation in Russia (the most important)

Lecture notes, cheat sheets

Directory / Lecture notes, cheat sheets

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Topic 9. Inflation (I). Causes, socio-economic consequences and methods of regulation. Features of inflation in Russia

I. is an increase in the general price level in the country and, in connection with this, the overflow of money circulation channels with paper money in excess of the needs for them, the emergence of excess money supply (Money Credit Banks lecture notes).

I. is a crisis state of the monetary system. The reason for I. is the disproportion between various spheres of the national economy, accumulation and consumption; supply and demand; government revenue and spending. There are internal and external factors of inflation: Internal (Non-monetary - monopolization of production, violation of imbalances in the economy, cyclical development of the economy. Monetary - growth in public debt; budget deficit; issue of money; increase in the speed of their circulation.); External - world crises (raw materials, energy, currency).

Forms of manifestation of I.: - an increase in prices for goods and services, which leads to the depreciation of money; - depreciation of the national currency in relation to foreign; - an increase in the price of gold.

Types of inflation:

1) creeping: at an annual rate of price growth of 3-4%; characteristic of developed countries, as stimulating.

2) galloping: with an average annual growth rate of 10-50%; for developing countries.

3) hyperinflation: with annual growth rates over 100%; in countries experiencing a breakdown in their economic structure.

Tempo I.: 2 types

1) Demand-pull inflation: occurs when there is excess demand. Demand for goods is higher than supply, which leads to higher prices. A lot of money with a small number of goods (associated with an increase in military spending; an increase in public debt; credit expansion).

2) Production cost inflation. Causes:

a) a decrease in labor productivity growth, which leads to an increase in costs per unit of production, a reduction in the supply of goods and an increase in prices;

b) expansion of the service sector, the emergence of new types of services with high costs and low levels of production, which leads to a general increase in prices; c)increasing wages as a result of the active work of trade unions; d) high indirect taxes.

The main forms of fighting inflation:

1) Monetary reform - complete or partial transformation of the monetary system in order to strengthen monetary circulation (devaluation, denomination);

2) Anti-inflationary policy - a set of measures for state regulation of the economy aimed at combating inflation:

▪ deflationary policy (by increasing interest rates; increasing the tax burden; organizing the money supply);

▪ income policy - parallel control over prices and wages, by completely freezing them or setting a limit to their growth.

Necessary measures for anti-inflationary policy:

▪ state development and implementation. Programs, economic development, industries and enterprises.

▪ Implementation of antimonopoly policy.

▪ Change and improvement of the tax system

▪ Stimulating credit and investment activities of banks

▪ Changes in monetary policy, which ensures a close relationship between all elements of the market mechanism.

The domestic type of I. differs from all others (the transition from a planned to a market economy). The main non-monetary factor of I. in 90 are: - the crisis of the planned economic system, which manifests itself in a decline in production; - uneconomical production is expressed in the costly nature of production, low labor productivity.

The main monetary factors include: 1) development of monopolistic structures 2) budget deficit 3) credit expansion of banks 4) dollarization of money circulation 5) introduction of privatization checks.

Authors: Shevchuk D.A., Shevchuk V.A.

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