Do social media posts help predict inflation and how do exchange rate regimes influence financial stability: New issue of Russian Journal of Money and Finance
The fourth issue of the scholarly quarterly Russian Journal of Money and Finance of 2022 has been published.
Posts and comments from social network users can become a basis for economic indicators comparable to existing survey-based consumer and business sentiment indices. Elena Shulyak (HSE University) builds a series of economic sentiment indices based on news posts and comments from users of the Russian social network VKontakte and finds that the indices based on VKontakte publications help make more accurate forecasts of inflation, the industrial production index, and the rouble exchange rates against the US dollar and the euro over a one-month horizon than estimates made using the model based on the previous values of these indicators. Elena Shulyak is a winner of the 2022 Economic Research Competition for Students and PhD Fellows organised by the Bank of Russia and the Russian Journal of Money and Finance.
Over recent decades, economists have repeatedly witnessed how a financial crisis, which arose in one region of the world, turned into a global one. Maxim Nikitin (International College of Economics and Finance, HSE University) and Branko Urošević (School of Computing, Union University) investigate conditions when this global contagion might occur. The authors demonstrate that, when countries have strong financial links, a switch from a fixed to a flexible exchange rate regime in one country increases the financial fragility of the system as a whole, although it might benefit an individual economy. The paper shows what threats countries within a monetary union might face if this union is broken up.
Banking crises tend to be preceded by rapid expansions in lending. Accordingly, regulators across the globe face the key task of identifying potential financial imbalances as early as possible. Maria Guseva (HSE University) estimates equilibrium debt burden, that is, an indicator conforming to the development level of the economy and the financial system, separately for corporate, mortgage, and consumer lending in Russia. In particular, the author’s estimates show that mortgage lending in Russia was below equilibrium in 2009–2019, i.e. further growth in this lending segment did not jeopardise financial stability, while consumer lending, during its boom in 2012–2015, significantly exceeded equilibrium.
The new issue of the Russian Journal of Money and Finance (No. 4, 2022) is available on its website.