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Accounting for Threshold Non-Monetary Events in Hybrid Inflation Models

Accounting for Threshold Non-Monetary Events in Hybrid Inflation Models

Journal of Economic Regulation, , Vol. 10 (no. 1),

The article shows that in recent decades the phenomenon of inflation has turned mainly from monetary phenomenon mainly into non-monetary. Applied calculations fully confirm this conclusion in relation to Russia. The dependence of inflation on non-monetary factors requires the development of new approaches to its modeling and forecasting. The calculations and analysis have shown the emerging transition from mono-instrumental model complexes to poly-instrumental analytical systems and the shift in potential inflation volatility into the area of short-term fluctuations. Thus, the focus in inflation modeling is shifting towards short-term forecasts. This is an independent instrumental problem. The authors propose a specialized system of inflation forecasting, which includes a decision-maker, an analytical core (a conjugate econometric model and a neural network) and an analytical interface (a system of accounting for threshold non-monetary events and a system of accounting for the volatility of inflation factors). A list of threshold events and a decision-making algorithm to adjust the model based on it with the help of the introduced indices of importance of events estimated the basis of an expert survey and the index of the inflationary potential of the environment are proposed in this article.

Keywords: inflation, non-monetary factors, threshold events, risk, modelling, forecasting, neural networks

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