Privileged access to drugs in Russia and differential inflation of its monetary substitute

Background and Objectives One of the most acute problems of current healthcare in Russia is the absence of drug provision in ambulatory care. Only invalids and war veterans are eligible for the free drugs. In 2005 this and other natural privileges were monetized - eligible people were offered to opt out for the money equivalent. The aim of this study was to evaluate the effectiveness of the monetary substitution of the social services, specifically the inflation of the money substitution of drugs. Materials and Methods We use the official state statistics and evaluate the inflation using the official inflation rate and using the BigMac Index from 2005 to 2019. Results Over the past 10 years, the nominal value of the monetary equivalent of the set of social services has grown by 149% in nominal prices (from 450 to 1121 roubles, years 2005-2018). Official inflation over these years was 197%. Measured by BigMac Index the set of social services depreciated from 10.7 to 8.3. The cost of the drug provision subset had depreciated even more - from 9.52 to 6.39 units. The pensions during this period had increased in nominal, inflation-adjusted monetary size, and as measured by BigMac index. A set of social services in the natural equivalent decreased by 22.4%. The drug subset had depreciated even more - by 67.1%. Conclusions During the period from 2005 to 2019, the cost of a set of social services provided to the eligible citizens in monetary terms grew, while inflation-adjusted value and in physical terms it depreciated. Especially significant was the decrease of the value of the drug provision due to incomplete indexation for inflation. The decrease in the real value of the set of social services provided to vulnerable groups of citizens is an alarming trend. It is long lasting, and reflect the low priority of the drug provision for the decision makers. Key messages The value of the drug provision package is insufficiently corrected for inflation. The depreciation of the drug provision is long term and different from the other components of social support.

Pro-rich inflation in Europe: Implications for the measurement of inequality

This paper studies the distributional consequences of a systematic variation in expenditure shares and prices. Using European Union Household Budget Surveys and Harmonized Index of Consumer Prices data, we construct household-specific price indices and reveal the existence of a pro-rich inflation in Europe. Over the period 2001–15, the consumption bundles of the poorest deciles in 25 European countries have, on average, become 11.2 percentage points more expensive than those of the richest deciles. We find that ignoring the differential inflation across the distribution underestimates the change in the Gini (based on consumption expenditure) by almost up to 0.04 points. Cross-country heterogeneity in this change is large enough to alter the inequality ranking of numerous countries. The average inflation effect we detect is almost as large as the change in the standard Gini measure over the period of interest.

Investigation of Engel-West explanation of Meese-Rogoff puzzle on Serbia-Eurozone case: Lag augmented VAR approach

The study is dedicated to research of Engel-West explanation of Meese-Rogoff puzzle on Serbia-Eurozone case (2004:q4 - 2015:q2). The analysis was conducted by applying lag augmented VAR procedure (LA-VAR), which enables quite reliable testing of Granger causality when (some or all) time series are non-stationary without mandatory prior testing of cointegration and differencing thereof. The following Engel et al. [2005] investigation was carried out on bivariate and multivariate VAR models, taking into account five macro?economic fundamentals (money supply differential, inflation rate differential, interest rate differential, real GDP differential and interaction of money supply differential and real GDP differential). The obtained results demonstrate quite unconvincing indications about empirical validity of present-value exchange rate models, and do not confirm findings of Engel et al. [2005].

Post-Keynesian alternative policies to curb macroeconomic imbalances in the Euro area

In this paper we outline alternative post-Keynesian policy recommendations addressing the problems of differential inflation, divergence in competitiveness and associated current account imbalances within the Euro area. We provide a basic framework in order to systematically address the related issues making use of Anthony P. Thirlwall?s (1979, 2002) model of a ?balance-of-payments-constrained growth rate? (BPCGR). Based on this framework, we outline the required stance for alternative economic policies and then we discuss the implications for alternative monetary, wage/incomes and fiscal policies in the Euro area as a whole, as well as the consequences for structural and regional policies in the Euro area periphery, in particular.