Preprint Article Version 1 Preserved in Portico This version is not peer-reviewed

Key Rate and Loan Market in Russia

Version 1 : Received: 20 December 2021 / Approved: 21 December 2021 / Online: 21 December 2021 (11:27:08 CET)
Version 2 : Received: 21 December 2021 / Approved: 22 December 2021 / Online: 22 December 2021 (14:42:02 CET)

How to cite: Borodachev, S.M. Key Rate and Loan Market in Russia. Preprints 2021, 2021120321 (doi: 10.20944/preprints202112.0321.v1). Borodachev, S.M. Key Rate and Loan Market in Russia. Preprints 2021, 2021120321 (doi: 10.20944/preprints202112.0321.v1).

Abstract

The paper proposes a mechanism for the impact of changes in the key rate on the volume of newly issued loans. The volume depends on the price (interest rates on loans), and the price depends on the key rate and the actual consumption of loans in the previous period (generalized cobweb cycle). The model was estimated by a Kalman filter, adequacy was confirmed by simulation. It is possible to forecast the average rate on loans for a month in advance according to the information published by the Central Bank of the Russian Federation (CB). By playing various scenarios for changing the key rate, it was found that in quiet periods of economic development, the usual laws of supply and demand operate in the loan market and by raising the key rate, you can reduce inflation. In the turbulent (overheated) state of the economy, an increase in the key rate can, on the contrary, provoke an increase in the issuance of loans and unconventional manipulations with the key rate are required.

Keywords

cobweb cycle; money creation; inflation; Kalman filter; scenarios

Subject

SOCIAL SCIENCES, Finance

Comments (0)

We encourage comments and feedback from a broad range of readers. See criteria for comments and our diversity statement.

Leave a public comment
Send a private comment to the author(s)
Views 0
Downloads 0
Comments 0
Metrics 0


×
Alerts
Notify me about updates to this article or when a peer-reviewed version is published.
We use cookies on our website to ensure you get the best experience.
Read more about our cookies here.