IDEAS home Printed from https://ideas.repec.org/a/ura/ecregj/v1y2018i4p1477-1487.html
   My bibliography  Save this article

Interrelation of Income, Inflation and Aggregate Demand in the Russian Economy

Author

Listed:
  • Vladimir Ilyashenko

    (Department of Political Economics)

  • Lyudmila Kuklina

Abstract

The choice of economic policy instruments to ensure economic growth is one of the important problems of the country. The purpose of the article is to analyze and characterize the interconnection of income, inflation and aggregate demand in the Russian economy and at the regional level in order to increase the effectiveness of the state’s economic policy. We show the contradictory causes of demand-pull inflation and cost-push inflation, as well as anti-inflationary measures aimed at overcoming them. The hypothesis is that the decline in inflation results from tight monetary policy and the use of monetary measures. The decline in inflation have negative effect associated with a reduction in aggregate demand in the economy, a slowdown in economic development or decline in production, a decrease in investment and innovation activity in the country, a decrease in real incomes. Based on the analysis of tabulated models, we have determined functional dependencies between changes in household incomes, inflation and aggregate demand. We have revealed that there was no unambiguous correlation between the money incomes of the population, investments, government spending and changes in the level of inflation in Russia. Moreover, the increase in total spending was more often accompanied by a decrease in inflation than by the development of inflation processes. We have concluded that the transition to the state policy of stimulation of cumulative demand is appropriate. The results of the research can be used when developing the state economic policy and regional programs aimed at ensuring the economic development of territorial subjects of the Russian Federation.

Suggested Citation

  • Vladimir Ilyashenko & Lyudmila Kuklina, 2018. "Interrelation of Income, Inflation and Aggregate Demand in the Russian Economy," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(4), pages 1477-1487.
    • Handle: RePEc:ura:ecregj:v:1:y:2018:i:4:p:1477-1487
    as

    Download full text from publisher

    File URL: http://economyofregion.ru/Data/Issues/ER2018/December_2018/ERDecember2018_1477_1487.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Milton Friedman & Anna J. Schwartz, 1982. "Monetary Trends in the United States and United Kingdom: Their Relation to Income, Prices, and Interest Rates, 1867–1975," NBER Books, National Bureau of Economic Research, Inc, number frie82-2, March.
    2. Mau, Vladimir, 2016. "Anti-crisis measures or structural reforms: Russian economic policy in 2015," Russian Journal of Economics, Elsevier, vol. 2(1), pages 1-22.
    3. A. Kudrin & E. Goryunov & P. Trunin., 2017. "Stimulative monetary policy: Myths and reality," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 5.
    4. Mau Vladimir, 2016. "Russian Economic Policy in 2015: Anti-Crisis Measures or Structural Reforms," Published Papers ppaper-2016-238, Gaidar Institute for Economic Policy, revised 2016.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Berezinskaya, Olga, 2017. "Investment drought in the Russian economy: Structural characteristics and turnaround perspectives," Russian Journal of Economics, Elsevier, vol. 3(1), pages 71-82.
    2. O. V. Buklemishev, 2023. "“Structural Transformation” of the Russian Economy and Economic Policy," Studies on Russian Economic Development, Springer, vol. 34(4), pages 456-463, August.
    3. Vladimir V. Ilyashenko, 2018. "The Interrelation of the Supply and Demand Factors in Ensuring an Intensive Type of Economic Growth," Journal of New Economy, Ural State University of Economics, vol. 19(4), pages 34-44, August.
    4. M. Petrov V. & М. Петров В., 2018. "Финансирование Компаний В Условиях Замедления Экономики И Санкций // Financing Companies In The Context Of Economic Slowdown And Sanctions," Финансы: теория и практика/Finance: Theory and Practice // Finance: Theory and Practice, ФГОБУВО Финансовый университет при Правительстве Российской Федерации // Financial University under The Government of Russian Federation, vol. 22(3), pages 83-99.
    5. A. Solov’ev K. & А. Соловьев К., 2018. "Проблемы Оценки Эффективности Индивидуально-Накопительной Модели Пенсионного Страхования // The Problems Of Assessing The Effectiveness Of The Individual-Accrual Model Of Pension Insurance," Финансы: теория и практика/Finance: Theory and Practice // Finance: Theory and Practice, ФГОБУВО Финансовый университет при Правительстве Российской Федерации // Financial University under The Government of Russian Federation, vol. 22(2), pages 90-105.
    6. Gerardo Manzo & Antonio Picca, 2020. "The Impact of Sovereign Shocks," Management Science, INFORMS, vol. 66(7), pages 3113-3132, July.
    7. Nelson, Edward, 2017. "Reaffirming the Influence of Milton Friedman on U.K. Economic Policy," Working Papers 2017-01, University of Sydney, School of Economics, revised Feb 2017.
    8. Neil R. Ericsson, 2021. "Dynamic Econometrics in Action: A Biography of David F. Hendry," International Finance Discussion Papers 1311, Board of Governors of the Federal Reserve System (U.S.).
    9. Taufiq Choudhry, 1996. "The Fisher effect and the gold standard: evidence from the USA," Applied Economics Letters, Taylor & Francis Journals, vol. 3(8), pages 553-555.
    10. Lastrapes, William D. & Selgin, George, 1995. "The liquidity effect: Identifying short-run interest rate dynamics using long-run restrictions," Journal of Macroeconomics, Elsevier, vol. 17(3), pages 387-404.
    11. Bardsen, G. & Klovland, J.T., 1990. "Finding The Rigth Nominal Anchor: The Cointegration Of Money, Credit And Nominal Income In Norway," The Warwick Economics Research Paper Series (TWERPS) 350, University of Warwick, Department of Economics.
    12. Prat, Georges, 2013. "Equity risk premium and time horizon: What do the U.S. secular data say?," Economic Modelling, Elsevier, vol. 34(C), pages 76-88.
    13. Perez, Stephen J. & Siegler, Mark V., 2006. "Agricultural and monetary shocks before the great depression: A graph-theoretic causal investigation," Journal of Macroeconomics, Elsevier, vol. 28(4), pages 720-736, December.
    14. Michael D. Bordo & Anna J. Schwartz, 2004. "IS-LM and Monetarism," History of Political Economy, Duke University Press, vol. 36(5), pages 217-239, Supplemen.
    15. Fratianni, Michele & Giri, Federico, 2017. "The tale of two great crises," Journal of Economic Dynamics and Control, Elsevier, vol. 81(C), pages 5-31.
    16. James Hartley, 1999. "Real myths and a monetary fact," Applied Economics, Taylor & Francis Journals, vol. 31(11), pages 1325-1329.
    17. Hugh Rockoff, 2008. "Great Fortunes of the Gilded Age," NBER Working Papers 14555, National Bureau of Economic Research, Inc.
    18. Nelson, Edward, 2003. "The future of monetary aggregates in monetary policy analysis," Journal of Monetary Economics, Elsevier, vol. 50(5), pages 1029-1059, July.
    19. Claudio Borio & Piti Disyatat & Mikael Juselius & Phurichai Rungcharoenkitkul, 2022. "Why So Low for So Long? A Long-Term View of Real Interest Rates," International Journal of Central Banking, International Journal of Central Banking, vol. 18(3), pages 47-87, September.
    20. Antonello D'Agostino & Paolo Surico, 2009. "Does Global Liquidity Help to Forecast U.S. Inflation?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(2-3), pages 479-489, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ura:ecregj:v:1:y:2018:i:4:p:1477-1487. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alexey Naydenov (email available below). General contact details of provider: http://www.economyofregion.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.