The HSE ESI and short-term cycles in the Russian Economy
This paper investigates the ability of Russian business tendency surveys to identify cycli-cal turning points. Presently, when the Russian economy is characterized by concentrating un-certainty, growing gap in opinions and actions of entrepreneurs and decision-makers, im-portance of such qualitative surveys as information resource significantly increased. National business surveys program were launched in 1993; since 2009, regular large-scale sectoral sur-veys are carried out by the Higher School of Economics in co-operation with the Federal State Statistics Service. The study is focused on the issue: whether the aggregate dynamics of busi-ness confidence assessments in Russia conforms to the real economic situation? We have tried to determine to what extent business surveys data are sensitive to phase alternating in cyclical development of the national economy. For this purpose, we have constructed an integrated al-gorithm to build specific indicators, which cover as far as possible all information contained in the sectoral business surveys results. Identification of turning points in these indicators dynam-ics allows us to track the possible ‘averaged’ chronology of the cyclical phase alternation. In addition, we have evaluated retrospective turning points in GDP growth according to extracted cyclical profile in dynamics of the composite Economic Sentiment Indicator
This report investigates the predictability of cyclical turning points in Russia. For years, anyone interested in Russia had access to a full set of common tools for business cycle analysis, such as several composite leading indicators, a purchasing managers’ index, enterprise and consumer sentiment indexes, and so on. However, the 2008-09 world financial crisis spread throughout Russia quite unexpectedly for most politicians, businessmen and experts alike. Is it possible that none of existing indexes were able to say anything about the approaching decline? Using a simple “rule of thumb” proposed in this report one may easily see that in reality this was not the case. So then why did a more or less definite forecast provided by some indexes have no consequences for common economic sentiments in Russia? This report gives some answers to this question.
All world upward trends and cycles have a lot in common while crises significantly differ. In the case of this research the recession was sparked not by the shock of financial sector but by the restrictions imposed on consumption that previously was not inclined to fluctuate that much. Oil price shock has increased negative influence on the world energy market and economy overall. The decline in employment and personal consumption has struck more on most vulnerable social classes but the decreased volume of demand can be also attributed to the wealth (catering, tourism and others). Once began, the recession develops by its own rules — a sharp fall in the world trade, fixed capital formation, growth of budget deficits, and particularly strong impact on developing countries most dependent on tourism and financial assistance.
Keywords: pandemic, coronavirus, COVID-19, business cycle, social inequality, personal consumption, capital formation, finance.
JEL: A14, D11, F02, T32.
The objective of this study is to develop a system of leading indicators of the business cycle turning points on a wide range of countries, including Russia, over a more than thirty years period. We use a binary choice model with the dependent variable of the state of economy: the recession, there is no recession. These models allow us to assess how likely is the change of macroeconomic dynamics from positive to negative and vice versa. Empirical analysis suggests that the inclusion of financial sector variables into equation can significantly improve the predictive power of the models of the turning points of business cycles. At the same time, models with financial and real sector variables obtained in the paper outperform the “naïve” models based only on the leading indicator of GDP in the OECD methodology due to either a lower level of noise (recession model) or a higher predictive power (model of the recovery from recession).
The paper examines the structure, governance, and balance sheets of state-controlled banks in Russia, which accounted for over 55 percent of the total assets in the country's banking system in early 2012. The author offers a credible estimate of the size of the country's state banking sector by including banks that are indirectly owned by public organizations. Contrary to some predictions based on the theoretical literature on economic transition, he explains the relatively high profitability and efficiency of Russian state-controlled banks by pointing to their competitive position in such functions as acquisition and disposal of assets on behalf of the government. Also suggested in the paper is a different way of looking at market concentration in Russia (by consolidating the market shares of core state-controlled banks), which produces a picture of a more concentrated market than officially reported. Lastly, one of the author's interesting conclusions is that China provides a better benchmark than the formerly centrally planned economies of Central and Eastern Europe by which to assess the viability of state ownership of banks in Russia and to evaluate the country's banking sector.
The paper examines the principles for the supervision of financial conglomerates proposed by BCBS in the consultative document published in December 2011. Moreover, the article proposes a number of suggestions worked out by the authors within the HSE research team.