Maxim Oreshkin: Problems arise when countries do not respond to inflation

The main panel discussion on Modern Monetary Theory: A New Outlook held as part of the first day of the 11th Gaidar Forum at the Presidential Academy, focused on new ways to boost economic growth. The key participants in the discussion of the potential of the new theory were Minister of Economic Development Maxim Oreshkin, University of Texas Professor James Galbraith and Harvard University Professor Kenneth Rogoff.

Over the past 10 years, developed economies have been struggling to regain the pace of growth that preceded the global financial crisis of 2008–2009. The extraordinary monetary easing programs failed to produce the desired stimulating effect. Today, alternative solutions are being vigorously explored. One of them is the so-called Modern Monetary Theory (MMT), which justifies the application of intensive fiscal stimuli while the monetary authorities keep the rates low.

Maxim Oreshkin pointed out that the eurozone has entered a long period of unemployment; Japan’s sovereign debt is 200% of GDP, but there is no reaction from the monetary authorities to change the situation: “In my opinion, the main sign of an unhealthy economy is inflation. It is a signal that incentive measures have stopped working. The structure of demand in the economy, the balance between private investment and government spending, and timely response are important. Problems arise when countries do not respond to inflation.”

The participants in the discussion cited China as an example of balanced monetary policy, which responds flexibly to the demand structure by keeping private lending at 20% of GDP and increasing the budget deficit when it goes down.

“A successful monetary policy can only be implemented through an independent Central Bank. Having the Central Bank report to the monetary authorities is a disastrous path. I remember January 2015 in Russia, low oil prices, large foreign currency debts – all factors conducive to a new crisis. Russia reacted in a professional and logical way; the Central Bank coped with the task perfectly. In the US, political motives obviously affect the economy. When Democrats are in power, they stimulate the economy by increasing the government’s share, while Republicans cut taxes, increasing political instability,” Kenneth Rogoff said.

At the same time, the quality of monetary policy coordination is becoming increasingly important. “The independence of its Central Bank does not protect a country from the crisis. Europe has created a problem for itself by organizing a supranational Central Bank, which does not report to any democratic institution in the European Union. The United States has a better model. I emphasize that it is impossible to use ready-made recipes from other countries. There is a set of available tools and a balance between them,” James Galbraith added.

Chairman of the Moscow Exchange Supervisory Board Oleg Vyugin, Director of Sberbank Center for Macroeconomic Research Oleg Zamulin, and Director of the Department of Finance and Mathematical Methods in Economics at Skolkovo NES Oleg Shibanov took part in the panel discussion as experts.


The 11th Gaidar Forum, Russia and the World: Challenges of the New Decade, held at the Presidential Academy on January 15 and 16, 2020, focuses on discussing national and global development goals and finding practical answers to the most pressing challenges of our time. The forum is attended by Cabinet ministers of the Russian Federation, members of the Federal Assembly, governors of Russian regions, major international experts, and representatives of foreign states.

11th Gaidar Forum Organizers:

The Russian Presidential Academy of National Economy and Public Administration (RANEPA);
The Gaidar Institute for Economic Policy (Gaidar Institute);
The Association of Innovative Regions of Russia (AIRR).

Forum partners:

General partners: Gazprom, Gazprombank. Strategic partners: Coca-Cola, Mastercard, Russian Railways, Pharmstandard group, Johnson & Johnson, Sanofi, Novartis Group, MSD, ACIG Group, EF Education First. Partners: Prosveshcheniye Group, EY, Huawei, RVC, Russian Agricultural Bank.

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