New issue of the Russian Journal of Money and Finance: How a commodity-exporting economy can maintain its welfare and how to predict credit cycle peaks

High volatility in commodity prices affects global economic activity and commodity currency effect creates serious difficulties for the conduct of monetary policy in commodity-exporting economies. According to a paper by Valery Charnavoki (New Economic School), which opens the second issue of the Russian Journal of Money and Finance for the year 2019, a flexible exchange rate regime tends to outperform a fixed exchange rate regime in terms of welfare.

A paper presented by researchers from the Deutsche Bundesbank and the South African Reserve Bank studies the impacts of a country’s access to various layers of the global financial safety net on sovereign borrowing costs in emerging markets, including a country’s international reserves, bilateral swap line agreements, regional financing arrangements and various IMF programmes. The analysis provided shows, in particular, that a country’s participation in a conventional IMF programme usually increases investors’ expectations about country-specific risk, whereas new preventive IMF programmes created since 2009 help reduce this risk.

In their article, Elena Deryugina and Alexey Ponomarenko (Bank of Russia) test the ability of early warning indicators to predict credit cycle peaks. Nikita Fokin (Russian Presidential Academy of National Economy and Public Administration) and Andrey Polbin (Russian Presidential Academy of National Economy and Public Administration; Gaidar Institute for Economic Policy) examine an application of the VAR-LASSO model to Russia's key macroeconomic indicators and present a forecast for Russia’s economic growth in the immediate future.

The issue closes with a paper by Lev Fomin (Bank Otkritie Financial Corporation), which analyses the possibility of anticipating banks’ defaults using such predictors as deposit and loan rates, and the ratio of spending on advertising to the bank’s assets.