Comparing public health policies and performances among BRICS countries - and beyond

Eric Magnin LADYSS, University of Paris, France  

Nikolay Nenovsky CRIISEA, University of Picardie Jules Verne, France / Bulgarian National Bank, Bulgaria / SU Higher School of Economics, Russia

Summary: From the fourth quarter of 2007 to the second quarter of 2020, the monetary base in the euro area grew by 330%, the money supply by 61% and inflation measured by the consumer price index - only 17%. Interest rates are around zero and negative, inflation is low, and we often register deflation (A similar trend is observed in the United States). This discrepancy between the growth of money and prices has not only practical dimensions for the ECB and FED monetary policy, but also a theoretical significance. At the same time, in most of the developing and BRICS countries, the trend is exactly the opposite, despite moderate debt levels - depreciation of national currencies, inflation, and therefore rising interest rates. This is observed in Brazil, Russia, Turkey, Nigeria, Argentina, and others. These dynamics have led to extreme reforms, such as the one in Venezuela, where the country is fully dollarized.

In this contribution, we propose an interpretation of these trends on the basis of concepts developed by J. Kornai in his economics of shortage analysis, which we apply to the sovereign debt market of both groups of countries. Specifically, we introduce the concepts of “soft monetary constraint”, “safety assets shortage”, etc., in a context of financial repression. The studied processes in the monetary policy of the two groups of countries are closely related, and they are part of a growing economic and monetary nationalism, as well as an increasing role of government and fiscal policy.