New Normal for Russia

Ksenia Yudaeva ()
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Ksenia Yudaeva: Centre for Economic and Financial Research

Published Papers from Russian Presidential Academy of National Economy and Public Administration

Abstract: Concept of the New Normal was invented in the United States by Bill Gross and Mohamed El-Erianom from the Pimco fund. The basic idea of this concept was that low economic growth and high unemployment is not a temporary situation in which the economy fell after the acute phase of the financial crisis and from which it would soon return to pre-crisis rate. On the contrary, it is the new norm for the economy, and to continue this situation for a long time. Later the same authors of the theory was developed and some are talking about beyond new normal. At the heart of this concept was the idea that the Fed's policy, holding zero interest rates, leads to the existence of multiple equilibria. Banks are not receiving income from lending may not develop the loan and to invest in financial instruments, despite the cheapness of resources. The same is true for investors. Therefore, the result of the policy of zero interest rates can be a stimulus, or a neutral or even a negative effect.

Keywords: new normal; policy of zero interest rates; Russia (search for similar items in EconPapers)
Pages: 20 pages
Date: 2015
New Economics Papers: this item is included in nep-cis
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