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Galloping inflation

Types of inflation depend on what factors are the basis of their classification.

When the prevailing causes of inflation serve as the criterion, the following types of inflation are distinguished:

- production costs;

- demand.

One of the criteria may be the rate at which prices in the country's market are rising. In this case, the following are distinguished:

1) hyperinflation;

2) creeping;

3) galloping.

1. If prices rise more than 100 percent, they talk about hyperinflation. It can happen in any country during a radical change in the structure of the economy. This phenomenon is temporary.

2. Moderate inflation is typical for countries with developed economies. There it is considered even a stimulating factor, when each year the prices rise by no more than 3-4 percent.

3. Galloping inflation occurs when, on average, prices rise by at least 10-15 percent per year. Sometimes they are allowed to grow to 100 percent. Although not all economists consider such a measurement of inflation of this type borderline possible. So, Samuelson argued that galloping inflation per year can reach 200 percent.

It is peculiar to developing countries. Sometimes another term is used to determine the rapid inflation - "jumplike". It can have different causes of formation. Depending on them, galloping inflation is divided into three more subspecies:

1) monetary;

2) demand;

3) costs.

They can manifest themselves together, forming a system, and separately.

Galloping inflation in demand is basic, ascending. Several factors influence its formation. But the main thing is the rapid growth in the volume of demand taken together. And it happens under the condition of employment of all resources and certain sizes of production. Accompanying galloping inflation is not physical, but nominal, that is, price growth in production volumes in its totality. In some cases, it can be further strengthened. This happens if in the state the prices of resources are easily raised and fall just as easily. This is especially true of wages, and hence of labor costs. Production volumes under galloping inflation can remain stable and fluctuate only in short periods. As a result, their level is still restored. At present, this kind of inflation can only occur in Western Europe, and then only at the stage of economic recovery. For Russia, in which there are significant fluctuations in production volumes, it is not typical.

The second kind is a galloping inflation of costs. It is formed in such conditions, when the prices for resources are rapidly growing and the production volumes are falling at the same speed. Galloping inflation of costs is one of the main components of the overall inflation occurring in Russia. It manifests itself during the recession of the economy.

The third type is monetary galloping inflation. Its development is affected by the rapid depreciation of the country's monetary unit. Inside it, two more subspecies are distinguished:

- Monetary galloping inflation, which occurs when both the production volumes are complete, and the resources are all busy, that is, during the economic recovery. For the current stage of Russia's development, it is not typical;

- Monetary galloping inflation, which occurs simultaneously with the spasmodic supply inflation. It is accompanied by a significant drop in production volumes.

At the end of the 20th century, this inflation was inherent in the Russian economy. It was especially pronounced in the period from 1993 to 1995. Then, in the next two years, it was suppressed, but still not completely overcome.

An important role in its structure is played not by the element caused by depreciation of the national currency, but by the one caused by the growth of the cost of resources.

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