The impact of the inflation-targeting regime on the economic development of an industrial region

Abstract

The priority goal of Russia’s monetary policy is keeping inflation close to the target. Within the inflation-targeting regime, the monetary policy is adopted at the national level and therefore, is uniform for all regions of the country. However, differentiation of inflation rates between regions characteristic of Russia’s economy gains even greater importance under the enacted policy, because inflation targeting produces different effects on the sustainability of the economic development of regions with different industrial structures. The paper aims to study the impact of the inflation-targeting regime on the economic performance of the Sverdlovsk oblast, which belongs to old industrial regions. The methodological basis of the research consists of the theoretical propositions of economic theory and macroeconomics. The authors use correlation and factor analysis, methods of observation and comparison. According to the findings, implementing inflation targeting since 2015 has permitted to reduce inflation and keep it down in the Sverdlovsk oblast. However, it has also contributed to the deterioration of the key indicators reflecting its economic development. The study concludes that despite being effective in terms of reducing inflation, the said regime impedes sustainable economic development of the industrial region.