Inflation Risks Generated by Non-Monetary Factors: Typology, Mechanisms of Occurrence, Estimation

Evgeny V. Balatsky
Professor, Financial University under the Government of the Russian Federation, RAS Central Economics and Mathematics Institute, Moscow, This email address is being protected from spambots. You need JavaScript enabled to view it.

Natal’ya A. Ekimova
Associate Professor, Financial University under the Government of the Russian Federation, Moscow, This email address is being protected from spambots. You need JavaScript enabled to view it.

Alexey N. Zubets
Professor, Vice-rector for strategic development and practice-oriented education, Financial University under the Government of the Russian Federation, Moscow, This email address is being protected from spambots. You need JavaScript enabled to view it.

Journal of Economic Regulation, 2018, Vol. 9 (no. 3),

p. 6-21
DOI: 10.17835/2078-5429.2018.9.3.006-021

The article deals a group of non-monetary inflation factors that generate a wide range of risks of its unpredictable acceleration. To streamline these risks, the authors introduce the typology that takes into account the nature of disturbances in the form of institutional, technological and behavioral (marker) factors, the geography (territory) of their origin in the form of external (outside the country) and internal (within the country) causes and the duration of disturbances, differentiated by short-term (less to six months) and long-term (more than six months) effects. It is shown that in order to understand the process of inflationary shocks, it is advisable to consider two qualitatively different groups of non-monetary factors – operational (short-term) and fundamental (long-term), which are differently integrated into the transmission mechanism of price growth. Is presented the simple analytical model integrating both types of factors and allowing to give new geometric interpretation of the impact of each group on inflation. If the influence of monetary factors and a group of operational non-monetary factors is equivalent to the movement along the inflation curve, then the influence of fundamental non-monetary factors is the transition to another inflation curve of general family of inflation curves. In such scheme, changes in the magnitude of operational factors lead to risks of short-term shifts in the equilibrium level of inflation, while changes in the magnitude of fundamental factors lead to risks of long-term disruption of the inflationary equilibrium.

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Keywords: inflation; monetary policy; non-monetary factors; risks; modeling

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Publisher: Ltd. "Humanitarian perspectives"
Founder: Ltd. "Humanitarian perspectives"
Online ISSN: 2412-6047
ISSN: 2078-5429