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The Phillips curve for an open economy: The evolution of inflation processes in Russia
https://doi.org/10.32609/0042-8736-2023-12-103-119
Abstract
Modern specifications of the Phillips curve are actively used in the study of inflation dynamics, but many of them do not consider the influence of external variables. In this paper, we use a non-linear GMM to estimate the Phillips curve equation for a small open economy which includes the expected change in the exchange rate on Russian data. Estimates show that the assignment of the new head of the Bank of Russia in 2013 and the subsequent transition to the inflation targeting regime significantly reduced the impact of expectations of a change in the ruble exchange rate on inflation which confirms the efficiency of the modification of the monetary policy regime. Another interesting result is that the outbreak of the pandemic has again led to an increase in the impact of the expected change in the exchange rate on inflation which may be a result of increased uncertainty in import prices. The empirical results also show that the pandemic caused a decrease in price rigidity in the Russian economy while the transition to an inflation targeting regime did not affect price rigidity.
About the Authors
A. V. Zubarev
Russian Presidential Academy of National Economy and Public Administration
Russian Federation
Russian Federation
Andrey V. Zubarev
Moscow
A. M. Gorodnov
Russian Presidential Academy of National Economy and Public Administration
Russian Federation
Russian Federation
Artem M. Gorodnov
Moscow
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For citations:
Zubarev A.V., Gorodnov A.M. The Phillips curve for an open economy: The evolution of inflation processes in Russia. Voprosy Ekonomiki. 2023;(12):103-119. (In Russ.) https://doi.org/10.32609/0042-8736-2023-12-103-119
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