At the beginning of 2020, the world community has faced the problem of the coronavirus, which, in the context of significant globalization of the world economy, quickly spread from China around the world, leading to a sharp slowdown in global economic growth. For Russia, the consequences of the pandemic, in addition to the decrease in export demand and strict quarantine measures, are compounded by a sharp drop in oil prices in the face of difficult negotiations with OPEC + and the need to limit oil production. All this necessitates active anti-crisis policy, which should include not only the support of the affected economic agents, but the intensification of different structural reforms aimed at accelerating the potential (structural) economic growth rates. At the same time, the possibilities of a significant fiscal stimulus are narrow due to the contraction of government revenues, limited borrowing opportunities and the rapid depletion of the National Welfare Fund in the event of a prolonged coronavirus pandemic.
This paper is dedicated to the memory of Yegor Gaidar, who founded the Gaidar Institute and for whom fiscal sustainability and responsibility was of paramount importance. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research. At least one co-author has disclosed a financial relationship of potential relevance for this research. Further information is available online at http://www.nber.org/papers/w19608.ack NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
In the paper we critically assess the stimulative monetary policy, proposed by the Stolypin Club and other experts. We discuss its inflationary consequences, the ability to accelerate economic growth along with created distortions in credit markets. We argue that the long-term macroeconomic stability cannot be sustained under managed exchange rate. We provide counterarguments to views, according to which inflation in Russia has nonmonetary roots and it is possible to increase money supply without causing inflation due to undermonetization of Russian economy and low utilization of production capacities. Negative consequences of monetary easing are illustrated with recent Belorussian experience.
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