Author:

Robert M. Nizhegorodtsev and Nina P. Goridko

Abstract:

The paper reconsiders economic theory in terms of interpreting the relationship between inflation and economic growth. It analyzes K. Marx and I. Fisher’s viewpoints on the necessary amount of money in circulation, as well as its impact on inflation. The authors deduce theoretical regularities that describe the relationship between the price level and the money supply, as well as between inflation growth rates and GDP dynamics in various segments of the aggregate supply curve in the midterm. The paper contains criticism of I. Fisher’s formula, which is a linear approximation (not confirmed by economic practice) of non-linear relationships taking place in real macro systems and discusses the NSEGRI concept (non-slowing economic growth rate of inflation) introduced by the authors earlier. The article shows a relationship between these theoretical constructions and the logic of monetary policy, including with regard to the modern Russian economy.

Keywords:macroeconomic equilibrium; amount of money in circulation; inflation; monetary policy; economic growth; forecasting horizon.

For citation:

Nizhegorodtsev R.M., Goridko N.P. Kontseptsiya NSEGRI: inflyatsiya kak stimul i kak baryer ekonomicheskogo rosta [The NSEGRI concept: Inflation as an incentive and a barrier to economic growth]. Izvestiya Uralskogo gosudarstvennogo ekonomicheskogo universiteta – Journal of the Ural State University of Economics, 2017, no. 2 (70), pp. 5–16.