In practical economic activity, it is important for business entities not only to correctly and comprehensively measure inflation, but also to correctly assess the consequences of this phenomenon and adapt to them. In this process, structural changes in price dynamics are of particular importance in the first place.
Specific situation
With "balanced" inflation, product prices rise, maintaining the same ratio between them. In this case, the relevance of the situation in the markets of goods and labor is important. When balanced, the income level of the population does not decrease, despite the fact that the value of previously accumulated savings is lost. With an unequal ratio, there is a redistribution of profits, structural changes take place in the production of services and goods. This is due to the imbalance of price fluctuations. The cost of everyday goods of inelastic demand rises especially rapidly. This, in turn, gives rise to a decrease in the quality of life and increased social tension.
Out of the situation
Negativethe consequences of an imbalance in the situation with prices require the leading apparatuses of various countries to pursue a coordinating policy. At the same time, analysts are trying to figure out which is better: to adapt to the existing situation or develop programs to eliminate it. This issue is resolved differently in different countries. When analyzing the situation, a whole complex of specific factors is taken into account. For example, in England and America at the government level, priority is given to the development of liquidation programs. At the same time, in other states, the task is to create a set of adaptation measures.
Keynesian approach
Analyzing the measures of anti-inflationary economic policy, we can distinguish two approaches to solving the problem. One of them is developed by modern Keynesians, and the second - by followers of the neoclassical school. In the framework of the first approach, the state's anti-inflationary measures are reduced to maneuvering taxes and spending. This ensures the impact on effective demand. Due to this, inflation is undoubtedly suspended. Anti-inflationary measures of this nature, however, also have a negative impact on production, reducing it. This can lead to stagnation, and in some cases to crisis phenomena, including an increase in the unemployment rate. Expansion of demand in the phase of recession is also achieved by the implementation of budgetary policy. To stimulate it, tax rates are reduced, programs of capital investments and other expenses are being introduced. First of all, low tariffs are set for those whoreceives low and medium incomes. It is believed that in this way it is possible to expand consumer demand for services and goods. However, as practice shows, such anti-inflationary measures can only worsen the situation. In addition, the ability to maneuver spending and taxes is significantly limited by the budget deficit.
Neoclassical theory
In accordance with it, financial and credit regulation comes to the fore. It is flexible and indirectly affects the current situation. It is believed that government anti-inflationary measures should be aimed at limiting effective demand. Adherents of the theory explain this by the fact that stimulating growth and maintaining employment artificially by lowering the natural rate of unemployment leads to a loss of control over the situation. Such a program is being carried out today by the Central Bank. Formally, it is not under government control. The bank influences the market by changing the amount of money in circulation and the interest rates on loans.
Adaptation programs
Within the framework of the modern market regime, it is impossible to eliminate all inflationary factors (monopolies, budget deficits, imbalances in the economy, the expectations of entrepreneurs and the population, and so on). That is why many countries, instead of trying to eliminate the situation, are completely trying to moderate the crisis phenomena, to prevent their expansion. Today, it is most expedient to combine short-term and long-term anti-inflationary government measures. Consider themmore.
Long-term program
This system of anti-inflation measures includes:
- Weakening the influence of external factors. In this case, the task is to reduce the inflationary impact on the economy of foreign capital spillovers. They manifest themselves in the form of short-term loans and credits of the country to pay off the budget deficit.
- Setting hard limits on annual money supply growth.
- Reducing the budget deficit, since its financing by securing loans from the Central Bank leads to inflation. This task is being implemented by reducing spending and raising taxes.
- Repayment of the expectations of the population, pumping up the current demand. To do this, clear measures of anti-inflationary policy should be developed to win the trust of citizens. The country's leadership should contribute to the efficient operation of the market. This, in turn, will have a positive effect on consumer psychology. In this case, anti-inflationary measures include price liberalization, stimulation of production, the fight against monopolization, and so on.
Short-term program
It aims to temporarily slow down inflation. In this case, the required expansion of aggregate supply without increasing aggregate demand is achieved by providing certain benefits to enterprises engaged in the production of secondary services and goods in addition to the main production. Part of the property can be privatized by the state, which will provide additional injections intobudget. This greatly facilitates the solution of shortage problems. In addition, a short-term state system of anti-inflationary measures reduces demand through the sale of a large volume of shares of new companies. Supply growth is facilitated by imports of consumer products. An increase in interest rates at rates has a certain effect. It raises the savings rate.
Anti-inflationary measures in Russia
For several years, the Central Bank, together with the Ministry of Finance, carried out a containment program. It consisted of ruble borrowings and the subsequent gradual decrease in dollar liquidity in the domestic market. As practice has shown, such a system of anti-inflationary measures could not ensure price stability. Moreover, their implementation is extremely dangerous for the country. Investing in real production has become an extremely unwise way out of the situation. However, the money that was squeezed out of the enterprises found a different direction. Thus, there was a significant increase in the value of real estate, an increase in sales of luxury goods and other expenses. At the same time, the profitability of "hot" capital, repeatedly announced by the Central Bank, has significantly changed the motivations of investors. It has become very profitable to convert foreign currency into rubles. The sphere of financial intermediation began to develop intensively. Today, in this sector, there are maximum salaries that are not accompanied by a commodity content. At the same time, the dependence of financial companies on external sources increased. The function of the national currency at the same time began to be reduced only to servicing the exchange of goods betweenimporters and transactions in the stock markets. Although the ruble was supposed to provide settlement relationships between domestic contractors and customers. The national currency thus became practically unclaimed in the Russian economy and prone to inflation.
Promising directions
An effective fight against the current situation, many experts see in stimulating economic growth. This path involves the use of natural, and therefore reliable regulatory tools. When additional funds become in demand in the domestic market, the entrepreneur will always find an opportunity to take money from a bank in his own country or abroad. In this case, the exporter will voluntarily convert the profits received into the national currency. If there is an abundance of money in the economy, they will be directed to bank deposits or foreign investments. The task of the issuing center should be to keep interest rates at a given level in order to prevent large fluctuations in the credit market. However, analysts note that such a situation in Russia is possible when the Central Bank becomes a "net creditor" for commercial banks. In this case, he will be able to dictate price conditions, and not be dependent on the market. Borrowing by the Central Bank itself will also be needed. However, they should be aimed at withdrawing temporary excess liquidity. Net lending will thus guarantee the profitability of open market operations. This, in turn, will providenecessary anti-inflationary effect.
Government loans
They artificially raise rates and negatively affect the financing of the real economic sector. At the same time, government loans require interest payments in favor of investors. As a result, they form a double crisis effect. First of all, loans slow down the growth of supply, secondly, they increase effective demand. With a complete cessation of borrowing, resources will be released to strengthen commodity production.
Taxes
The development of domestic business is significantly hampered by excessive government interference in its activities, reporting and numerous checks. According to experts, the greatest problems are created by the taxation system. A number of authors propose to exempt medium and small businesses from all fees, except for those motivated by public services. With such an easing, there will be no significant budget losses, but this will partially cancel the non-market principle of interaction between government and entrepreneurs. Such anti-inflationary measures will allow businesses to fulfill their social task, which is to replenish the shelves with products and provide citizens with work and wages. When exempted from taxes, the business will be eaten out of the shadows. These anti-inflationary measures will serve as a powerful stimulus for the development of the manufacturing sector.
Extra
In addition to those described above, experts suggest using other anti-inflationary measures. They must be such that they are effective.did not require much preparation. Among them, in particular, analysts propose to introduce duties close to prohibitive duties on energy exports. This will be able to ensure the country's raw material security in the long term, replenish domestic markets with fuel, and increase competition. This, in turn, should lead to lower prices.
Conclusion
Today, inflation is considered one of the most dangerous and very painful processes. It negatively affects the financial and economic sector. Inflation is not only a decrease in the level of purchasing power of funds. It destroys the mechanisms of economic regulation, nullifies all the efforts made in the process of carrying out structural reforms, and leads to an imbalance in the markets. The nature of the manifestation of inflation can be different. Processes cannot be considered only as a direct result of certain actions of the country's leadership. Inflation is caused by deep distortions in the economic system. From this it follows that its entire course is not random, but rather stable. In this regard, the development of anti-inflationary measures is now becoming the main task of the government.
As mentioned above, crisis exit programs involve long-term strategies. However, they become effective only when the society's inflationary expectation is promptly extinguished. To solve this problem, it is necessary to develop programs to strengthen market mechanisms and the confidence of the majority of citizens. ATas a mandatory measure to curb inflation, of course, should be the reduction of the budget deficit. At the same time, it should be remembered that all programs will be effective only if the manufacturing sector is simultaneously developed and stimulated. A decrease in money demand can be achieved through the strengthening of the commodity market, the opportunity to invest in shares, and the organization of reasonable privatization. As a result, conditions will be formed to maintain the lowest possible inflation rates. They will not be able to have a significant impact on the market mechanism and interfere with the normal development of the country.
