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How does inflation influence income inequality in Russia?

Author

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  • Philipp S. Kartaev
  • Olga A. Klachkova
  • Anna S. Lukianova

Abstract

The paper studies the impact of inflation on income inequality in Russian regions. It was revealed that the reduction in inflation from double-digit rate to the Bank of Russia’s target did not help to mitigate inequality, but rather exacerbated it. We identified a group of products which changing price dynamics affects inequality. The price increase may lead to the decline in inequality through redistributive effect. It is shown that in Russia this effect is associated with the channel of unexpected inflation that results in real wealth transfer from more prosperous lenders to less well-off borrowers. The policy of inflation targeting, successfully implemented by the monetary authorities in recent years, has reduced the volatility of inflation and limited the operation of this channel. At the same time, quantitative estimates of the increase in inequality as a result of achieving price stability remain relatively low.

Suggested Citation

  • Philipp S. Kartaev & Olga A. Klachkova & Anna S. Lukianova, 2020. "How does inflation influence income inequality in Russia?," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 4.
    • Handle: RePEc:nos:voprec:y:2020:id:2823
    DOI: 10.32609/0042-8736-2020-4-54-66
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    Cited by:

    1. Tatiana Yu. Ivakhnenko, 2023. "Modeling of Income Inequality of the Population with Spatial Dependence in Russia [Моделирование Неравенства Доходов Населения С Учетом Пространственной Зависимости В Рф]," Russian Economic Development, Gaidar Institute for Economic Policy, issue 7, pages 21-28, July.
    2. Valeria Zvereva & Olga Demidova & Dmitry Korshunov & Alexander Myasnikov, 2024. "Impact of Intraregional Income Inequality on the Operation of the Bank of Russia’s Monetary Policy Transmission Mechanism," Russian Journal of Money and Finance, Bank of Russia, vol. 83(1), pages 3-31, March.
    3. Tatiana Yu. Ivakhnenko, 2023. "Моделирование Неравенства Доходов Населения С Учетом Пространственной Зависимости В Рф," Russian Economic Development (in Russian), Gaidar Institute for Economic Policy, issue 7, pages 21-28, July.

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