What should the inflation rate be? (On the importance of a long-standing discussion for defining today’s development strategy for Russia)

This article sets out to demonstrate that every economy at a specific time has its inherent, quite definite, rate of inflation. Inflation rates may vary widely depending on economic situation and should be estimated in a dynamic perspective. They include a component associated with the degree of transformation of production facilities, which determines the “normal” rate of inflation. Another component, reflecting the influence of extra investment, which may prove necessary to compensate for the previous period of decapitalization of the Russian economy, varies through the investment cycle. This makes it possible to forecast inflation fluctuations around the “normal” rate; their recognition should be the basis for establishing a socially and politically acceptable rate of inflation within a particular development strategy.