Russian Journal of Money and Finance: How firms revise prices and what impacts inflation expectations in Russia
The first issue of the quarterly Russian Journal of Money and Finance of 2026 has been published. In the new issue, authors analyse factors affecting Russian firms’ price revisions, study mechanisms shaping inflation expectations, and estimate the price gap between primary and secondary housing markets.
Firms change their prices depending on many factors, such as inflation, exchange rates, the phase of the business cycle, firms’ financial position, etc. Marya Nema from the Bank of Russia and her co-authors use the data from the Bank of Russia’s monitoring of businesses to demonstrate that firms’ response to these factors is asymmetric. For example, when business activity grows, price increases are more notable than price decreases recorded when business activity declines.
People’s inflation expectations do not often align with rational expectations. For example, a temporary surge in prices may be interpreted as the start of permanent growth. A study by Dmitry Novikov (European University at St Petersburg) based on data on consumers’ inflation expectations in Russia and the US shows that this divergence is well explained by the diagnostic expectations hypothesis. According to the hypothesis, people’s expectations are based on recent events whose significance is overestimated in any economic environment, rather than on all available data (in line with the traditional hypothesis of rational expectations).
The impact of a central bank’s narrative on inflation expectations is illustrated by the experiment conducted by Elizaveta Zvezdina (Lomonosov Moscow State University). People tend to perceive a key rate increase as a factor raising costs (rather than a decline in demand), which leads to higher inflation (rather than to its slowdown). This is exactly how the key rate increase was interpreted by most participants in the experiment. However, those who received a narrative explaining the impact of the key rate on inflation, lowered their inflation expectations.
Although prices for new housing often exceed those for existing housing, a zero gap is recorded in most regions, with some regions even reporting lower prices for new builds. This is shown by Ianina Roshchina (Lomonosov Moscow State University) and Anna Litvinova (Yandex.Technologies LLC). The authors have developed a methodology for estimating the price gap between the primary and secondary markets, factoring in various housing characteristics.
All the articles from this issue are available on the website of the journal.