Eleventh Global Studies Conference

Abstract

Since the end of 2014, due to a series of external and internal shocks and long-term stress factors, the Russian economy has been in a protracted crisis. The result is a steady increase in the population’s poverty, which leads to a change in its consumption patterns and its financial and migration activity. But, at the same time, income inequality in Russia shows a reduction within the same period of time. Due to the increasing international political instability, the influence of monetary policy on the economic situation remains beyond social and academic attention. Even less attention is paid to the influence of this policy on the inequality progression. In our study, we focus on it and specifically on the fact that the Russian monetary regulator collided with a specific monetary trap of a cyclical nature - inflation had and still has an external nature and was inspired by external shocks, and a systemic oil cost cut together with aggravated political tension reduced Russia’s gold and currency reserves (by 70% which depend on fuel and energy companies) faster than they could recover (even with an increase in external lending activity of national macro-regulators and other undertaken measures). Detailed analysis of the nature and structure of the monetary trap based on data from national and international sources, a number of behavioral patterns of the population, etc., let us make a conclusion that the current inflation decline, as well as the share decrease of the upper decile in the distribution of the total amount of money income from 47.6% to 47.1%, are consequences of shock depletion of the population, rather than the product of social compensatory policies, or an increase in demand for the ruble as a currency. These conclusions also reflect another aspect of the peculiarities of the resource growth model, which was outside the framework of scientific and practical attention. Such economies dependent not only on quotations for key exported goods, but their domestic economic agents (firms or households) also adapt themselves under the prevailing conditions, planning their long-term behavior, focusing on key resource corporations and their direct and indirect capital flows. This is manifested in the vulnerability of a significant share of market agents in sudden and long-term external and internal shocks. The result of it is that depletion of the broad population levels inevitably leads to a worsening position of the super-rich groups.