The Bank of Russia at the Crossroads: Does the Monetary Policy Needs Easing

19 Pages Posted: 22 May 2013

See all articles by Eugene Goryunov

Eugene Goryunov

Gaidar Institute for Economic Policy

Pavel Trunin

Gaidar Institute for Economic Policy

Date Written: May 22, 2013

Abstract

Recent slowdown of economic growth forces Russian political authorities to seek for policy measures to support economic activity. Monetary expansion is considered as one of the possible alternatives, which we consider inappropriate. During the whole post-crisis period monetary authorities of advances economies in their attempts to boost recovery relied heavily on different sorts of monetary stimulus. Thus it is sometimes argued that Russia should better use such kind of experience and shift to aggressive monetary expansion. This view is mostly wrong since it shows misunderstanding of the goals of the monetary easing policy implemented in advanced economies and also ignores the differences between Russia and advanced countries with respect to macroeconomic conditions. There are two main reasons for extraordinary monetary expansion in advanced economies: sizable cyclical recession and “zero lower bound” problem. Since none of these is present in Russia there’s no reason for implementation of monetary easing policy.

Keywords: Central Bank, monetary policy, monetary easing

JEL Classification: E42, E51, E52, E58, E61, E63

Suggested Citation

Goryunov, Eugene and Trunin, Pavel, The Bank of Russia at the Crossroads: Does the Monetary Policy Needs Easing (May 22, 2013). Available at SSRN: https://ssrn.com/abstract=2268289 or http://dx.doi.org/10.2139/ssrn.2268289

Eugene Goryunov (Contact Author)

Gaidar Institute for Economic Policy ( email )

Gazetny per., 3-5
Moscow, 125993
Russia

Pavel Trunin

Gaidar Institute for Economic Policy ( email )

Gazetny pereulok, 3-5
Moscow, 125993
Russia

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