Anti-inflationary policy of Ukraine

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Introduction

The most effective indicator of "health" the economy is its financial position. Because the financial system not only provides the necessary linkages in the economy, it is one of the most powerful levers of macroeconomic regulation, the instrument by which governments are able to regulate economic development. That is why the executive of each country aimed at ensuring the stability of financial and credit system and financial condition in general. The key to this, among other things, the state should be "handling" inflation. The need for this due to the fact that inflation not only leads to severe social and economic consequences - under inflation lose effectiveness and result in deformation of instruments of macroeconomic regulation.

In the development of a modern mixed economy of state interventions, and in the latter - the choice of an adequate macroeconomic policy that prevents inflyatsii growth and unemployment are of particular importance.

None of the currently known market economic system does not function spontaneously. They are the objects of state regulation. In this direction and form of state intervention vary according to the situation in the ECONOMIC system.

Manipulation of taxes and the size of government spending, price controls are the main Instruments by which government can assist in overcoming unemployment and inflation.

Therefore, in this work will be discussed related with inflationary processes in the economy. Actually, in the first part we shall understand the notion of the nature of inflation, its species, let us mention the socio-economic consequences of inflation and What are the main ways to control inflation. The second part of the work will elucidate the essence and causes of inflation in Ukraine for the period 1992-1996 and review of anti-inflation policies in recent years (2005-2006).

Concepts, causes and types of inflation - a general overview of the problem

I. The concept of inflation

As economic phenomenon inflation has been around a long time. It is believed that its occurrence is associated with the emergence of paper money to the operation of which it is inextricably linked.

Term inflation (from Lat. Inflatio - inflation) first began to be used in North America during the Civil War

1861 - 1865's and meant the process of increasing the paper - cash flow. In the nineteenth century, this term is used also in England and France. Widespread in the economic literature the notion of inflation was given in the twentieth century soon after the First World War.

Top 90s of the twentieth century there was no post-socialist countries, which would not have felt the devastating effects of inflation. In classical economic theory, inflation is treated as part of the theory of money. It is the process of raising the general level of prices and declining purchasing power of money. Dzh.M.Keyns first analyzed inflation as part of macroeconomic theory.

Militarism, changing the Keynesian theory in the 80s is not just include the problem of inflation in macroeconomic theory. Problems of inflation are an important part of the latter. "When inflation - writes M. Friedman - I mean a steady and continuous rise in prices that always and everywhere a monetary phenomenon appears, caused by excessive weight of money relative to output." This provision assures that the causes of inflation - in circulation. And therefore allowed limit state influence in the processes of social reproduction.

In contrast to Keynesian theory during inflation means excess demand, which causes - both on the supply side and demand: "In the event that the supply of money in comparison with the supply of goods for sale has increased, there is inflation."

Since the mid 60s in the global economic science formed a new direction in the study inflation. Its representatives come from the need for a comprehensive analysis of monetary phenomena that take into account the overall changes in the economy of the 2nd half of the twentieth century. Under this approach, the most important feature of modern inflation is close interweaving of monetary and general economic factors of price increases. Hence, no matter what the reasons are the initial pulses, any price increase makes it necessary to increase the money supply and vice versa.

In other words, the growth of the latter often appears not as a cause of price increases, and as its derivative. Money and general factors in this process changes the place of the causes and consequences of inflation. Therefore, all possible increase in price inflation is strengthening and is thus inflationary. According to this theory, inflation, especially in a transitional economy, is due to many processes occurring in the monetary and directly in social production. Wherever the action launched inflationary factors - whether in production or in public finance, or in fact, monetary area - inflation rising prices accompanied by an increase in money supply. First, it is in active circulation by reducing savings, and then increases the total mass of money. Overflow channels of circulation money supply devalues the currency, which is the most distinctive feature of inflation in its classical form.

Inflation - a process of growth in the overall price level in the country as a result of violations of the law of money circulation. Inflation occurs when the circulation is in excess of money (cash and cashless). This situation leads to a depreciation of the money "desheviyut" and the prices become a growing tendency. Inflation is a subtle socio - economic phenomenon, generated by disparities in different areas of the market economy. At the same time inflation - one of the most acute problems of modern economic development of virtually all countries.

II. The causes of inflation

Regardless of monetary commodity prices may rise as a result of changes in the dynamics of productive labor, cyclical and seasonal fluctuations, structural changes in the dynamics of production, monopolization of the market, state regulation of economy, the introduction of new taxes, change konyuktury market, the effect of foreign economic relations, natural disasters, etc. Hence the rise in prices caused by different reasons. But not every rise in prices - inflyatsiya.Sered above mentioned reasons, price growth is important to distinguish true inflation.

This rise in prices associated with cyclical fluctuations konyuktury, can not be called inflation. As the passage of various phases of the cycle (especially in its "classical" form characteristic of the nineteenth - early twentieth century) and will change the dynamics of prices. They increase during the boom and changing them in the fall phases of crisis and depression, and again the growth phase in recovery. Increased productivity, other things being equal, should lead to lower prices. Another thing - if productivity growth is accompanied by a rise ahead of wage growth. Such a phenomenon called inflation costs. Natural disasters can not be a cause of inflationary price increases. Thus, if as a result of flooding in some areas destroyed home, then obviously increase the price of building materials. This will stimulate manufacturers of building materials to expand the supply of its products and as saturation of the market price will fall.

What can really be attributed to inflation causes price increases? Call the most important of them.

In - the first is dysproportsiynist or imbalance in public expenditure and income appearing in the budget deficit. If this deficit is financed by the active use of "printing press" it increases the weight of money in circulation, and hence inflation.

In - Second, inflationary price increases may occur if the financing is carried out similar methods. Especially dangerous is the inflation investments related to militarization of the economy. Thus, unproductive use of national income on military targets not only means loss of national wealth. At the same time military spending creates an additional effective demand, which leads to an increase in money supply without a corresponding commodity coverage, increase military spending is one of the main causes of chronic state budget deficit and increasing public debt in many countries to cover the state which increases the money supply.

By - Third, with increasing "openness" of the economy of this or that country, more involvement of the world's economic ties increase the danger of "imported" inflation.

In - the Fourth, inflation becomes self supporting character as a result of inflation expectations. Many scholars in the West and our country especially isolated this factor that overcoming inflation expectations and manufacturers - the most important (if not main) job anti-inflation policy

Many causes of inflation observed in almost all countries. But Raman dependence on specific economic factors. Thus, immediately after World War II in Western Europe, inflation has been associated with an acute shortage of many goods. In the years leading role in rozkachuvanni inflationary process began playing public expenditure, the ratio "price - wage" inflation transition from other states and some other factors.

III. Types of inflation

inflation ukraine combat

Inflation as a phenomenon occurred simultaneously with paper money, because gold coin in circulation surplus money can not be. There are "classic" and contemporary inflation.

For the "classic" inflation (XVIII - XIX centuries.) Characteristic is its temporality. It came under extraordinary circumstances (long war, which increased state expenditures, etc.). Current inflation is chronic (stable) character. She became a permanent element of the process of reproduction. Demonetization of gold, the gap between paper bonds, checking and lending money and gold, provided the movement of money autonomous nature, relatively independent of the circulation of goods, their offers.

The cause of inflation initially considered universal transition to paper money. However, even after the monetary issue was taken under strict control, inflation has not disappeared. It turned out that inflation can be different reasons and it is very different.

Inflation can occur sparingly - to be "creeping" in this type of price inflation rising no more than 10% per year. Such inflation can effectively adjust prices according to changing conditions of production and demand.

"Galloping" inflation, with this kind of price inflation increased from 20 to 200% per year, is already a serious problem for the economy, although the rise in prices is not difficult to predict and include options contracts and agreements.

The most destructive for the economy is hyperinflation, showing an astronomical growth of money in circulation and as a consequence of catastrophic growth of commodity prices. The role of money in most such cases, greatly reduced and the population, and thoughts businesses moving to other less effective forms of calculation, for example - barter. In some cases, appear separate parallel currency, greatly increasing role of foreign currencies. Hyperinflation causes severe blow even the most affluent sections of society.

When inflation excess money demand resulting from growth in total cash costs of enterprises, government and households. Demand in the country is more aggregate supply of goods and services, and this inevitably leads to rising prices.

Equally dangerous is the inflation of costs when prices rise due to increased production costs. Increased demand for a new increase in cost when purchasing the necessary production resources that again "pushes" the price up where these resources are used. Inflation jumps in prices as a result of mutually reinforcing, their growth is, in fact, self sustaining, with a growing rate.

Two major sources feeding inflation costs - a growth of nominal wages and prices for raw materials and energy. Excessive wage growth typically generates inflation because labor unions, requiring constant increase wages for workers of the industry should consider general economic condition of the country, the average level of wages. The growth of production costs, a rotating wrap prices, leading to sudden, unexpected increase in commodity prices, especially - for energy, which is fully felt in the economy of a newly independent Ukraine.

The worst thing in inflation costs that it generates inflationary psychology. This phenomenon occurs when the mass consciousness of the people there is confidence that inflation will increase and more. Thus workers are beginning to demand wage increases "in future price increases," and entrepreneurs advance lay in the price of their products expected higher costs for raw materials, energy, labor and credit.

All these types of inflation exist only at open her position - ie with a relatively free market. In the "hidden" inflation growth in prices of goods and services can not be observed, and the depreciation of money may be expressed in short supply offers.

Also, inflation can be balanced and unbalanced. When balanced inflation rates rise relatively moderately, while for most goods and services. In this case, the results of average annual growth of prices rising interest rate the state bank and thus the situation becomes equivalent to stable prices. In the case of unbalanced inflation rates for various goods and services rise neodnochasno and differently for each type of product.

There is also the expected and unexpected inflation. Expected inflation can be predicted at any time and usually is the direct result of government actions. As examples of price liberalization in Russia in 1992 and the corresponding forecast price increases before - in December 1991. Unexpected inflation is characterized by an unexpected jump in prices, which negatively affects the tax system and money circulation. In the case of the presence in the population of inflationary expectations, this situation will cause a sharp increase in demand, which in itself creates difficulties in the economy and changes the real picture of public demand, leading to a failure in forecasting trends in the economy and with some hesitation government even stronger increase inflationary expectations will increase the price rise. But in the case where a sudden jump in prices in the economy is on the infected inflationary expectations, there is a so-called "Pigovian effect" - a sharp drop in demand from the population in the hope of a rapid decline in prices. As a result of reduced demand forced the manufacturer to reduce the price, everything returns to the position of equilibrium.

Social-economic consequences inflyatsii

The main socio-economic consequences of inflation are: redistribution of income, the hidden state konfiskatsiya money from people through taxes, accelerated materializatsiya money realnoi protsentnoi incidence rates for Capital.

The main effect of distribution arises due to inflation in asset i vidminnosti liabilities held by men. For indyvida that i had received a loan on it to make annual (or monthly) payment at the rate percent, inflation is actually with positive momentum. For example, borrowed 100,000 dollars for the building of purchase i schorichni platezhi zakladniy to make 10,000 dollars in case of increase tsin 2 times, that there inflyatsii, platezhi on zakladniy None do not change i will be exposition YOURSELF 10,000 dollars per year, although the number of benefits that can be purchased for that amount will decrease twice. (If inflation tryvas long enough, then in market interest rates gradually peredbachastsya amendment to INFLATION. so to say, initially in economy was 3% on the rate and stabilni prices, i peredbachastsya growth of prices by 9 % per year. Nominalna rate of 12% corresponds to the real interest rate plus 3% inflationary nadbavtsi 9%. redistribution of income and wealth is not, when protsentni rates vidrehulovani.) debtor with only wins, since the real interest for the use of Capital decreased by half. On the whole, unexpected inflation pererozpodilyaye wealth from kredytoriv to borzhnykiv and unexpected reduction in inflation PACE gives the opposite effect. INFLATION c major factor that affects vidsotkovi rates, since under its influence changes kupivelna spromozhnist currency i decreases real prybutkovist investments Besides redistribution dohodiv vplyvas inflation for the economy because of total production. Such influence on spralyastsya level of output as a whole.

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