Pushkinskaya st. 43. office 10
Rostov-on-Don, Russia
e-mail: info@hjournal.ru 
tel. +7(863) 269-88-14

cubsEN (2)

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

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

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

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.

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

  • Balatsky, E. V., Ekimova, N. A. (2018). Non-Monetary Factors in Monetary Policy Transmission Mechanism: Revision of Inflation Management Strategy. The Manager, 5. (In Russian).
  • Ball, L., Mazumder, S. (2011). Inflation dynamics and the great recession. Brookings Papers on Economic Activity, 337–406.
  • Baranov, A. O., Somova, I. A. (2015). Analysis of main factors of inflation dynamics in post-Soviet Russia. Studies on Russian Economic Development, 26(2), 110–123.
  • Barr, D. G., Campbell, J. Y. (1997). Inflation, real interest rates, and the bond market: A study of UK nominal and index-linked government bond prices. Journal of Monetary Economics, 39(3), 361–383.
  • Behravesh, N. (1976). Forecasting inflation: does the method make a difference. Business Review, Sep., 9–17.
  • Biswajit, M. (2016). Inflation Dynamics in India: Relative Role of Structural and Monetary Factors. Journal of Quantitative Economics, 1(2), 1–19.
  • DiCecio, R., Nelson, Ed. (2013). The Great Inflation in the United States and the United Kingdom: Reconciling Policy Decisions and Data Outcomes // In: Bordo M., Orphanides A. (ed.) The Great Inflation: The Rebirth of Modern Central Banking. Chicago: University of Chicago Press, 393–438.
  • Dmitrieva, O., Ushakov, D. (2011). Demand-pull Inflation and Cost-push Inflation: Factors of Origination and Forms of Expansion. Voprosy Economiki, 3, 40–52. (In Russian).
  • Duncan, R., Martínez-García, E. (2018). New Perspectives on Forecasting Inflation in Emerging Market Economies: An Empirical Assessment. Working paper. (https://www.dallasfed.org/~/media/documents/institute/wpapers/2018/0338.pdf – Access Date: 18.09.2018).
  • Faust, J., Wright, J. H. (2009). Comparing Greenbook and reduced form forecasts using a large realtime dataset. Journal of Business & Economic Statistics, 27(4), 468–479.
  • Faust, J., Wright, J. H. (2013). Forecasting inflation. Handbook of economic forecasting, 2, 2–56.
  • Gilmutdinov, V. M., Denisov, A. O. (2012). Influence of Non-Monetary Factors on Inflation in Russia. ECO, 1, 116–129. (In Russian).
  • Goloshchapova, I. O., Andreev, M. L. (2017). Estimation of inflationary expectations of the Russian population by methods of machine learning. Voprosy Ekonomiki, 6, 71–93. (In Russian).
  • Kihangire, A. D., Mugyenyi, A. (2005). Is Inflation Always And Everywhere A Non-Monetary Phenomenon: Evidence from Uganda. Bank of Uganda. (https://econwpa.ub.unimuenchen.de/econ-wp/if/papers/0508/0508011.doc – Access Date: 18.09.2018).
  • Krasavina, L. N. (2012). Inflation Risk Mitigation as a Factor in Achieving Forecast Targets of Inflation and Price Stability. Money and credit, 12, 3–11. (In Russian).
  • Mankiw, N. G., Reis, R., Wolfers, J. (2003). Disagreement about inflation expectations. NBER macroeconomics annual, 18, 209–248.
  • Non-monetary Factors of Inflation and Measures to Reduce Its Volatility. (2017). Moscow: Bank of Russia. (http://www.cbr.ru/Content/Document/File/25502/nfi.pdf – Access Date: 18.09.2018). (In Russian).
  • Pechalova, M. Yu. (2017). The Monetary Policy of the Bank of Russia and Inflation Processes in the Economy. Economics, taxes & law, 3, 31–42. (In Russian).
  • Sokolova, A. V. (2014). Inflation expectations and the Phillips curve: estimation on Russian data. Money and credit, 11, 61–67. (In Russian).
  • Sousa, R., Yetman, J. (2016). Inflation expectations and monetary policy // BIS Papers, 89 (https://www.bis.org/publ/bppdf/bispap89d_rh.pdf – Access Date: 18.09.2018).
  • Stivens-Davidovic, S. (2018). Everybody lies. Search engines, big data and the Internet know all about you. Moscow: Publishing house «Eksmo». (In Russian).
  • Visconti, R. M. (2012). Inflation Risk Management in Project Finance Investments. International Journal of Finance and Accounting, 1(6), 198–207.
  • Zhemkov, M. I., Kuznecova, O. S. (2017). The Measurement of inflation expectations of financial market participants in Russia. Voprosy Ekonomiki, 10, 111–122. (In Russian).
Publisher: Ltd. "Humanitarian perspectives"
Founder: Ltd. "Humanitarian perspectives"
Online ISSN: 2412-6047
ISSN: 2078-5429