Best Monetary Policy Rules: New issue of Russian Journal of Money and Finance

The fourth issue of the scholarly quarterly Russian Journal of Money and Finance of 2023 has been published.

Global business activity shocks and oil market shocks considerably affect Russia’s economy, but the scale of this impact certainly varies. The model constructed by Daniil Lomonosov (RANEPA) shows a significant reduction in the effects of these shocks on the domestic economy after the Bank of Russia changed the monetary policy rule from exchange rate management to inflation targeting. 

Various monetary and macroprudential policy rules applied by regulators to maintain financial stability can influence households’ welfare differently. Based on evidence from the eurozone, Meylis Orazov (HSE University; Gaidar Institute for Economic Policy) tries to identify an optimal policy that could improve economic agents’ welfare and mitigate economic and financial shocks. The author concludes that specifications of monetary policy can be considered the best where the central bank sets its policy rate depending on not only inflation and output, but also the aggregate level of borrowing in the economy. 

To combat the COVID-19 pandemic, many governments introduced lockdowns which can be seen as a special mode of economic functioning. However, what used to be unexpected at the beginning might become expected over time. Elisei Leonov (Gaidar Institute for Economic Policy; RANEPA) assumes that economic agents’ expectations regarding potential repetition of the pandemic and ‘special modes’ will in the long run lead to a new equilibrium in the economy involving a decline in aggregate output, consumption, and employment.

The new issue of the Russian Journal of Money and Finance (No. 4, 2023) is available on the website.