Inflation and Redistribution Processes in the Modern World

University Saint-Petersburg State University, Faculty of Economics, 7-9, Universitetskaya nab., St. Peterburg, 199034, Russian Federation

^* Corresponding author: t.kotsofana@spbu.ru

Abstract

Research background: Inflation and redistributive processes are the main permanent threats to economic stability in the modern world and these processes are closely interconnected. Inflation is a powerful tool for redistributing national income, both consciously used by economic entities and generated within the economic system.

Purpose of the article: To demonstrate the variety of mechanisms that connects inflation and redistributive processes in the modern economy.

Methods: The dialectical-materialistic and concrete-historical method forms the methodological basis of research. The empirical basis of analysis is formed by statistical materials and specific economic and statistical studies.

Findings & Value added: Monopoly power in all its manifestations is the first and key mechanism for redistributing social income through inflation processes. The dollar’s monopoly position in international settlements has long been one of the factors of global inflation processes and redistribution of the global public product in favor of the United States in the global economy. The highest degree of monopolization of Russian market is the main generator of Russian inflation and the reason of the disproportionate development of Russian economy. The state has the largest number of redistributive levers and quite often acts as a voluntary or involuntary initiator of inflation and redistribution processes. Inflationary expectations make a significant contribution to the formation of inflationary potential in the face of low confidence in the authorities, lack of information, political monopolism, and economic instability. This is manifested in advance overpricing for traded goods and services, interest rates, etc., which, in turn, may strengthen redistribution processes, especially in the context of monopolistic pricing.