Generate QR code
Open Access
Subscription Access
Does income inequality affect inflation in Russia?
https://doi.org/10.32609/0042-8736-2022-10-5-19
Abstract
The paper examines the impact of income inequality in Russian regions on the dynamics of the overall price level. In the framework of econometric modeling based on panel data of 82 Russian regions for 2011—2020, it was evidenced that higher inequality restrains inflation, while reducing inequality accelerates price growth. To overcome the problem of endogeneity, an approach based on instrumental variables is applied. It is shown that the result is robust to changes in inequality measures, estimation methods and instrumental variables. The potential channels of influence of income distribution inequality on inflation and the effectiveness of monetary policy explaining the effect are analyzed.
About the Authors
P. S. Kartaev
Lomonosov Moscow State University
Russian Federation
Russian Federation
Philipp S. Kartaev
Moscow
M. A. Samsonova
Lomonosov Moscow State University
Russian Federation
Russian Federation
Marina A. Samsonova
Moscow
References
1. Baybuza I. (2018). Inflation forecasting using machine learning methods. Russian Journal of Money and Finance, Vol. 77, No. 4, pp. 42—59. (In Russian).] https://doi.org/10.31477/rjmf.201804.42
2. Borzykh O. A. (2016). Bank lending channel in Russia: A TVP-FAVAR approach. Applied Econometrics, Vol. 43, pp. 96—117. (In Russian).
3. Glushchenko K. (2010). The law of one price in the Russian economic space. Applied Econometrics, Vol. 17, No. 1, pp. 3—19. (In Russian).
4. Kartaev P. S., Klachkova O. A., Lukianova A. S. (2020). How does inflation influence income inequality in Russia? Voprosy Ekonomiki, No. 4, pp. 54—66. (In Russian). https://doi.org/10.32609/0042-8736-2020-4-54-66
5. Kartaev P. S., Yakimova Y. I. (2018). The influence of inflation targeting on the pass-through effect of the exchange rate. Voprosy Ekonomiki, No. 11, pp. 70—84. (In Russian).] https://doi.org/10.32609/0042-8736-2018-11-70-84
6. Napalkov V., Novak A., Shulgin A. (2021). Differences in the effects of a single monetary policy: The case of Russian regions. Moscow: Bank of Russia. (In Russian).
7. Pavlov E. (2020). Forecasting inflation in Russia using neural networks. Russian Journal of Money and Finance, No. 1, pp. 57—73. (In Russian).] https://doi.org/10.31477/rjmf.202001.57
8. Perevyshin Y. N., Sinelnikov-Murylev S. G., Trunin P. V. (2017). Factors of price differentiation in Russian regions. HSE Economic Journal, Vol. 21, No. 3, pp. 361—384. (In Russian).
9. Ponomarev Y., Trunin P., Ulyukaev A. (2014). Exchange rate pass-through in Russia. Voprosy Ekonomiki, No. 3, pp. 21—35. (In Russian).] https://doi.org/10.32609/0042-8736-2014-3-21-35
10. Shestakov D. E. (2017). Monetary transmission cost channel in Russian economy. Russian Journal of Money and Finance, No. 9, pp. 38—47. (In Russian).
11. Al-Marhubi F. (2000). Income inequality and inflation: The cross-country evidence. Contemporary Economic Policy, Vol. 18, No. 4, pp. 428—439. https://doi.org/10.1111/j.1465-7287.2000.tb00039.x
12. Alesina A., Drazen A. (1991). Why are stabilizations delayed? American Economic Review, Vol. 81, No. 5, pp. 1170—1188.
13. Alesina A., Perotti R. (1996). Income distribution, political instability, and investment. European Economic Review, Vol. 40, No. 6, pp. 1203—1228. https://doi.org/10.1016/0014-2921(95)00030-5
14. Alesina A., Özler S., Roubini N., Swagel P. (1996). Political instability and economic growth. Journal of Economic Growth, Vol. 1, No. 2, pp. 189—211. https://doi.org/10.1007/BF00138862
15. Ampudia M., Georgarakos D., Slačálek J., Tristani O., Vermeulen P., Violante G. L. (2018). Monetary policy and household inequality. ECB Working Paper, No. 2170. https://doi.org/10.2139/ssrn.3223542
16. Auclert A. (2019). Monetary policy and the redistribution channel. American Economic Review, Vol. 109, No. 6, pp. 2333—2367. https://doi.org/10.1257/aer.20160137
17. Beetsma R. M. W. J., van der Ploeg F. (1996). Does inequality cause inflation? The political economy of inflation, taxation and government debt. Public Choice, Vol. 87, No. 1/2, pp. 143—162. https://doi.org/10.1007/BF00151733
18. Bhattacharya J., Bunzel H., Haslag J. (2001). Inflationary finance in a simple voting model. Unpublished manuscript, Iowa State University.
19. Binder C. (2019). Inequality and the inflation tax. Journal of Macroeconomics, Vol. 61, No. C, article 103122. https://doi.org/10.1016/j.jmacro.2019.103122
20. Clayton A., Josefsson C., Mattes R., Mozaffar S. (2019). In whose interest? Gender and mass—elite priority congruence in Sub-Saharan Africa. Comparative Political Studies, Vol. 52, No. 1, pp. 69—101. https://doi.org/10.1177/0010414018758767
21. Colciago A., Samarina A., Haan J. (2019). Central Bank policies and income and wealth inequality: A survey. Journal of Economic Surveys, Vol. 33, No. 4, pp. 1199—1231. https://doi.org/10.1111/joes.12314
22. Cukierman A. (1992). Central bank strategy, credibility, and independence: Theory and evidence. Journal des Économistes et des Études Humaines, Vol. 3, No. 4, pp. 581—590. https://doi.org/10.1515/jeeh-1992-0410
23. Desai R. M., Olofsgård A., Yousef T. M. (2005). Inflation and inequality: Does political structure matter? Economics Letters, Vol. 87, No. 1, pp. 41—46. https://doi.org/10.1016/j.econlet.2004.08.012
24. Dolmas J., Huffman G. W., Wynne M. A. (2000). Inequality, inflation, and central bank independence. Canadian Journal of Economics / Revue Canadienne d’Économique, Vol. 33, No. 1, pp. 271—287. https://doi.org/10.1111/0008-4085.00015
25. Edwards S. (1994). The political economy of inflation and stabilization in developing countries. Economic Development and Cultural Change, Vol. 42, No. 2, pp. 235— 266. https://doi.org/10.1086/452079
26. Edwards S., Tabellini G. (1994). Political instability, political weakness and inflation: An empirical analysis. In: C. Sims (ed.). Advances in econometrics: Sixth world congress. Cambridge: Cambridge University Press, pp. 355—376. https://doi.org/10.1017/CCOL0521444608.009
27. Garriga C., Kydland F. E., Šustek R. (2015). Mortgages and monetary policy (Working Paper No. 751). Queen Mary University of London, School of Economics and Finance.
28. Guerello C. (2018). Conventional and unconventional monetary policy vs. households income distribution: An empirical analysis for the Euro Area. Journal of International Money and Finance, Vol. 85, No. C, pp. 187—214. https://doi.org/10.1016/j.jimonfin.2017.11.005
29. Haggard S., Webb S. B. (1993). What do we know about the political economy of economic policy reform? The World Bank Research Observer, Vol. 8, No. 2, pp. 143—168. https://doi.org/10.1093/wbro/8.2.143
30. Kaminsky G. L., Pereira A. (1996). The debt crisis: Lessons of the 1980s for the 1990s. Journal of Development Economics, Vol. 50, No. 1, pp. 1—24. https://doi.org/10.1016/0304-3878(96)00002-8
31. Londregan J., Poole K. (1990). Poverty, the coup trap, and the seizure of executive power. World Politics, Vol. 42, No. 2, pp. 151—183. https://doi.org/10.2307/2010462
32. Sachs J. (1990). Social conflict and populist policies in Latin America. In: R. Brunetta, C. Dell’Aringa (eds.). Labour relations and economic performance (International Economic Association Series). London: Palgrave Macmillan, pp. 137—169. https:// doi.org/10.1007/978-1-349-11562-4_6
33. Selezneva V., Schneider M., Doepke M. (2015). Distributional effects of monetary policy. 2015 Meeting Papers, No. 1099. Society for Economic Dynamics.
34. Thomas S., Welch S. (1991). The impact of gender on activities and priorities of state legislators. Western Political Quarterly, Vol. 44, No. 2, pp. 445—456. https://doi.org/10.1177/106591299104400212
35. Voinea L., Lovin H., Cojocaru A. (2018). The impact of inequality on the transmission of monetary policy. Journal of International Money and Finance, Vol. 85, pp. 236—250. https://doi.org/10.1016/j.jimonfin.2017.11.007
Review
For citations:
Kartaev P.S., Samsonova M.A. Does income inequality affect inflation in Russia? Voprosy Ekonomiki. 2022;(10):5-19. (In Russ.) https://doi.org/10.32609/0042-8736-2022-10-5-19
Views:
1387
Email this article 
