Pavel Trunin

The Feldstein-Horioka Puzzle: Modern Aspects

The primary purpose of this paper is to test the hypothesis of capital mobility reduction in the wake of the global financial crisis of 2008-2009. Through the constructed models we tested hypotheses about the long- and short-term mobility of global capital by estimating the correlation between savings and investment rates. The paper also deals with the question of capital mobility in Russia. Recommendations on monetary policy in Russia in the coming years based on the obtained findings were made.

Exchange Rate Pass-Through in Russia

This article provides estimates of short-term and medium-term exchange rate pass-through in Russia during 2000–12, using a vector error correction model. Estimates of the asymmetry of exchange rate pass-through in different subperiods and the effect of exchange rate volatility on its magnitude are also presented.

An Analysis of the Impact of the Balance of Payments' Capital Account on Macroeconomic Processes in Russian Federation

The present research deals with the effect capital flows have on Russia’s macroeconomic indicators. Numerous nations have recently completed the so-called liberalization of the capital and financial account, i.e. have lifted restrictions on capital flows. That is why looking into the impact capital flows have on an economy’s development has formed a universal subject of economic research. Because of this, we have evaluated the impact of capital flows in and out of RF over the period between 1999 and 2007 against the background of the gradual liberalization of the capital and financial account of Russia’s balance of payments on the country’s macroeconomic indicators.

Moving the G20’s investment agenda forward

Abstract This article argues that it is of paramount importance that the G20 pays attention to the mounting challenges faced by the international investment regime. This is all the more important because international investment is crucial to advance sustainable development, especially in developing countries. For both immediate and long-term reasons, investment policies should therefore be a core item on the agenda of the G20 and the Trade and Investment Working Group in particular. The present article makes two sets of recommendations: first, the G20 should continue its work on international investment policy reform and initiate steps to operationalise the Guiding Principles for Global Investment Policymaking; second, the G20 should support ongoing WTO discussions on investment facilitation suggesting that they should aim not only at facilitating more foreign direct investment (FDI), but sustainable FDI. The policy recommendations provide an input for the Japanese G20 presidency in 2019.

Fiscal and Monetary Policy

For 25 years since the start of market reforms, Russian progress in fiscal (budgetary) and monetary policy in the direction of developed countries has been significant. Russia has created a modern tax system, institutional mechanisms for administering revenues from the export of oil, an expenditure management system and a system of fiscal federalism. It has provided a high degree of independence to the central bank (the Bank of Russia), transitioning to an inflation-targeting regime and a floating exchange rate. In this chapter, we aim to explain how fiscal and monetary policy has evolved over the course of the post-Soviet history of Russia, which problems have been addressed by the Russian government by means of fiscal and monetary instruments and which ones remain and how they should be addressed. Among the remaining challenges, perhaps the most important one is the continued lack of “coordination” or, more precisely, the lack of mutual regard between fiscal and monetary policies in Russia. This has militated against macroeconomic stability and led to recurring economic crises (or otherwise complicated the economy’s exit from these crises).

Scope of Interest Rate Policy of Central Banks

After the Bank of Russia had switched to inflation targeting, its key rate became the main instrument of monetary policy. Based on the experience of both developed and developing countries, the authors conclude that besides regulating the key interest rate monetary authorities have a wide range of interest rate policy instruments. By regulating the width of the interest rate corridor and the location of the key rate within the corridor, monetary authorities get the opportunity to manage not only the level of the target interest rate and its volatility, but also to influence transnational capital flows. Interest rate instruments known since early 1990s were widely used by inflationtargeting monetary authorities during the crisis of 2008–2009 and the post-crisis period, when many of them experienced an increase of short-term foreign capital inflows and exchange rate volatility, which entailed increased risks for price and financial stability. The authors also confirm the significant role of such a traditional instrument of monetary policy as required reserves. Monetary authorities of developing countries use them to regulate monetary conditions in order to eliminate imbalances in the structure of credit organizations’ liabilities and, first of all, for the purpose of dedollarization and stimulation of the attractiveness of long-term deposits in national currency. According to the authors, widening the spectrum of interest rate instruments used by the regulator will help increase the flexibility and effectiveness of the Bank of Russia’s monetary policy.

Russiaas Balance of Payments in Q3 2017

Russia’s current account balance continued to contract in Q3 2017 on the back of stabilizing exports amid rising imports. A financial account surplus was led by foreign capital inflow (FDI) into other sectors, as well as by nonresident purchases of Federal Loan Obligations (OFZs). A double BOP surplus led to a moderate appreciation of the Russian rouble.

Analysis of the Evolution of Global Regulation in Separate Segments of Financial Markets

Russian Abstract: Система наднационального финансового регулирования начала активно развиваться в 1970-х гг. на фоне повышения открытости финансовых рынков и активного развития финансовых инструментов. В настоящее время стандарты наднационального регулирования охватывают деятельность ключевых сегментов финансового рынка и финансовых корпораций: деятельность банковского сектора, страховых организаций, платежных и расчетных систем, фондов коллективных инвестиций, рынка ценных бумаг, систему страхования вкладов и организации финансовой отчетности. Cтановление и развитие финансовой деятельности в России требуют соответствующего развития системы регулирования с учетом передового международного опыта. В работе проводится анализ эволюции наднациональных подходов к регулированию отдельных сегментов финансовых рынков, степень вовлеченности России в систему наднационального регулирования и соответствия национальных подходов к регулированию отдельных сегментов финансовых рынков мировым стандартам. English Abstract: Global system of financial regulation began to develop in the 1970s. in the conditions of increasing openness of financial markets and active developing of financial instruments. Currently global regulation standards cover the activities of key segments of the financial market and corporations: the banking sector, insurance organizations, payment and settlement systems, collective investment funds, securities market, a system of deposit insurance, and the organization of the financial statements. Development of financial activities in Russia requires an appropriate control system development, taking into account international best practices. The paper analyzes the evolution of global regulation system of individual segments of the financial markets, the extent of Russian involvement in global regulation and compliance with national approaches to the global standards.

Анализ Региональной Дифференциации Инфляции (Analysis of the Regional Differentiation of Inflation)

Russian Abstract: В работе проведено исследование факторов дифференциации региональных уровней цен и темпов инфляции в разрезе субъектов РФ. Закон единой цены на отдельные товары в российских регионах выполняется для группы товаров, которую можно условно назвать однородной: их качество и функциональные свойства не отличаются между регионами. Для 70% рассмотренных товаров гипотеза единой цены не подтвердилась. Масштабы ценовых различий в российских регионах сокращаются, но по-прежнему существенны. В 2015 г. стоимость потребительской корзины в самом дешевом и самом дорогом регионе отличалась примерно в 2,5 раза. Причины пространственных различий цен в регионах: уровень доходов на душу населения и степень удаленности региона от всех остальных. Национальные факторы, выделенные на основе макроэкономических показателей, объясняют примерно 53% вариации региональных темпов инфляции во времени в 1996-2015 гг. English Abstract: The paper studied the factors of regional differentiation of price levels and inflation in the Russian regions. The law of one price for certain goods in the Russian regions is true for a group of products that can be called homogeneous: their quality and functional properties do not differ between regions. For 70% goods considered the hypothesis of one price was rejected. The extent of price differences in the Russian regions are declining, but still remain significant. In 2015, the cost of living in the cheapest and most expensive region differed 2.5 times. The reasons for price differences in the Russian regions include the level of per capita income and the degree of remoteness of the region from the rest. Domestic factors, determined on the basis of macroeconomic indicators, explained about 53% of the variation of the regional rate of inflation in 1996-2015.

Capital Controls: World Experience and Lessons for Russia

The article investigates causes and consequences of the introduction of capital controls. The evolution of the views of international organizations on capital mobility restrictions including the revision of liberal views of economic community after the global financial crisis of 2008-2009, when it became clear that high capital mobility is one of the sources of imbalances in the financial sector, is examined. The main theoretical concepts, which take into account the advantages of openness and related macroeconomic risks, are presented, as well as the economic consequences of inflow and outflow of various types of capital flows, including foreign direct investment, portfolio investment, loans, etc., are analyzed. The evolution of capital controls in Russia, considered simultaneously with the dynamics of inflow and outflow of capital from the Russia, shows that the key factors in the movement of capital are the state of the Russian economy, as well as internal and external shocks, while the practice of using restrictions on the financial account has proved to be poorly effective. According to the analysis of theoretical concepts and international experience of functioning of economies in the face of restrictions on cross-border capital operations by the example of Brazil, Malaysia, Chile, India, China and other countries, as well as the study of the Russian practice in regulation of capital transactions, the authors conclude that capital controls can only be imposed in exceptional cases when it is necessary to mitigate the negative effects of shocks associated with changes in conditions of global financial markets. In this case, the advantage should always be given to macroprudential measures.