In recent years, central banks have turned to forward guidance as a key tool of monetary policy. However, standard DSGE models overestimate the impact of forward guidance on the economy, a phenomenon known as the “forward guidance puzzle.” In the model employed, the reaction of firms to a central bank’s announcements depends on the degree of anchoring of inflation expectations. When firms do not revise their forecasts much in response to inflation surprises, the effects of forward guidance shocks are attenuated. Furthermore, an increase in the Taylor rule coefficients implies a faster reversion of inflation and output to their steady state levels, thus resulting in more anchored inflation expectations and dampened effects of forward guidance announcements. However, the central bank's exclusive focus on price stability eliminates forward guidance effects. This paper also studies the dependence of forward guidance on fiscal policy, which arises in a nonRicardian economy. We show that the initial effects of the central bank’s announcements become considerably stronger when steady state debt is positive, whereas a stronger reaction of fiscal policy to debt fluctuations attenuates the power of forward guidance.

Based on panel data analysis of weighted average interest rates in Russia’s regions, this paper documents differences in the responses of regional mortgage markets to changes in money market rates (in this instance, MIACR), which are influenced primarily by changes in the key rate of the Central Bank of Russia. The efficiency of monetary transmission is significantly affected by the degree of competition in regional mortgage markets. The authors propose that this may be explained by the different roles that money market instruments play as a source of liabilities for particular banks and, therefore, by variations in the amplitude of transmission of money market rates into mortgage rates. In addition, mortgage interest rates are influenced by the amount of competition in a regional mortgage market as well as by the purchasing power of borrowers in housing markets and by the quality of life in the Russian regions. This is explained via the standard microeconomic logic of market structures and the role of the PTI (the payment-to-income ratio, which indicates how much of a borrower’s income is spent on loan repayment) in determining degree of risk and ultimately the risk premium. The amount of migration into a region is also negatively correlated with mortgage interest rates.

The acceleration of government expenditures and public debt in both developed and developing countries has prompted concerns about the medium-term sustainability of fiscal policies. If these trends persist, countries may reach a point in the coming decades when fiscal dominance is challenged and the central bank’s ability to combat inflation through higher interest rates is constrained by the risk of undermining fiscal sustainability. Experts have frequently pointed out that, under such conditions, the central bank may be forced to abandon inflation targeting and adopt a more passive role. This paper offers an alternative scenario by proposing that the central bank’s mandate be adjusted to reflect the evolving economic landscape, specifically by incorporating the level of real public debt. This adjustment to the central bank’s mandate means that the optimal monetary policy rule would directly depend on the fiscal policy regime. The analysis conducted here using a New Keynesian DSGE model demonstrates that the kind of change in the mandate that this article proposes would make central bank policy more resilient toward changes in the fiscal policy regime and facilitate balance between stabilized inflation, output, and the level of public debt. In addition, the inclusion of debt in the central bank mandate would enable the bank to retain its active role in fighting inflation in response to an active fiscal policy. The article indicates that a fiscal dominance regime does not necessarily force the central bank to completely lose its independence in shaping monetary policy or to abandon the basic principles of inflation targeting.

This paper proposes a DSGE model for the Russian economy with a new specification in which the utility function of Ricardian households is described using Jaimovich-Rebelo preferences to reduce the impact of the income effect on labor supply. Along with Ricardian households, the model also considers non-Ricardian households that consume all their current income. The DSGE model depicts a small open economy that consists of two production sectors: domestic and export. The model is realistically calibrated and provides a qualitative analysis of differences in fiscal multipliers under varying conditions for the economy’s functioning in order to identify the impact of different versions of the utility function on the transmission of fiscal policy. Further econometric assessment of the model’s parameters would be required to obtain more accurate estimates of the fiscal multipliers. The conclusion is that, under free flow of capital, government spending on final consumption of goods and services results in multipliers greater than one if the increase in government spending is short-term (1 to 2 quarters), or if the central bank responds to a fiscal shock with monetary stimulus. For public investment and transfers, the multipliers are systematically less than one because much of this expenditure is spent on imports. With strict limits on the movement of capital, the situation changes dramatically; the multipliers for all the types of government spending considered when an increase in it is sustained for one year comes to about 1.5. However, a strong GDP response to government spending shocks typically has serious inflationary consequences. Therefore, the high inflation and rapid recovery of GDP with some signs of overheating observed in recent years can be qualitatively attributed to an expansive fiscal policy in the presence of restrictions on the movement of capital.

This article examines a relatively new and non-standard phenomenon in the Russian labor market — shortage of labor, which may in principle retard overall economic growth. Assessing the extent and causes of this deficit is a task for independent scientific investigation. The article relies upon various sources of information, each of which shows a different trajectory for the increase in labor shortages. There are both long-term and short-term reasons for the expansion of job vacancies. Long-term causes include demographic factors which have been predetermined during previous decades and which manifest most significantly as a reduction in the potential working-age labor force. The short-term impacts of the epidemiological crisis of 2020-2021 and the economic sanctions that came into force after 2022 are still unfolding but are comparatively limited. The article examines the prospects and limitations of various methods for overcoming the labor shortage, such as raising the retirement age, providing incentives for immigration, increasing the economic activity of various age groups, lengthening work schedules, and industrial and sectoral restructuring of employment. The authors conclude that these measures will have only a partial and short-term impact. Any long-term and strategic solution depends upon increased labor productivity, which requires restructuring the economy, developing its high-tech sectors, and more investment in the economy, education, and human capital.