Future of Inflation Targeting in the Russian Federation
|Author:||Mgr. Alice Navrátilová|
|Year:||2013 - summer|
|Leaders:|| Ing. Zuzana Fungáčová M.A., Ph.D.
|Work type:|| Economic Theory
|Awards and prizes:|
|Abstract:||Hereby presented Master Thesis deals with an analysis of preparedness of the Russian monetary policy for adoption of inflation-targeting regime. We define the impact of different factors on the level of inflation and consequently their importance in the process of predicting inflation in the period from January 2006 to September 2012 in the Russian Federation.
The selection of the factors is based on theory and on the examination of the Russian monetary policy environment, taking into account the credibility, transparency and accountability of the monetary institutions and the financial sector and real economy specifications. The analysis of interconnections among the factors is based on a vector autoregressive regression model VAR(4) as well as on Granger causality test and impulse-response analysis.
Our results indicate that the major role in inflation formation among the chosen variables, the exchange rate prevailed in the observed period and the interest rate gained in importance to certain extent. Thus the Russian Central Bank has proceeded to prepare the monetary policy rule for the adoption of inflation-targeting regime. Nevertheless, building more sound monetary and financial institutions, successful implementation of flexible exchange rate and abandoning exchange rate targeting, as preconditions for the effective inflation-targeting regime, are areas to be still mastered.