The choice of a macroeconomic policy in an open economy is constrained by a trilemma in which only two of the following three policy goals can be achieved at the same time: exchange rate stability, monetary independence, and capital mobility. The constraints on economic policy imposed by this trilemma have been confirmed in both theory and practice for more than sixty years. Central banks are nevertheless forced to seek some compromise that will relax those constraints. The economic literature has proposed various tools and mechanisms for making them less rigid and facilitating central banks in reaching their policy goals, an especially urgent concern for developing countries. The tools that have been offered were effective before the global financial crisis, but this study shows that they have now lost their usefulness because global economic trends linked to capital flows, exchange rate stability, and debt dynamics have changed. The paper assesses the effectiveness of the best-known instruments for easing the trilemma, such as accumulating large foreign exchange reserves and foreign exchange interventions by monetary authorities that partially substitute for capital controls. A new approach based on the ratio of short-term external public debt to a country’s foreign exchange reserves is proposed. The conclusion is that decreasing the ratio of debt to reserves makes the restrictions imposed by the trilemma less harsh and also enables fuller realization of macroeconomic policy goals, an outcome confirmed by data from developing economies after the financial crisis.

The article examines ways to improve inflation forecasting by using high frequency consumer price data in time series models. The purpose of increasing the number of observations available at a higher frequency is to increase the accuracy of inflation forecasts. The theoretical part of the paper considers the advantages and disadvantages of using high frequency price data in ADL, VAR and MIDAS inflation models with both single and mixed data frequency. The empirical section traces out the effects of including an online price index available at a daily or weekly frequency during the period from 2020 to 2023 in the forecast model for the consumer price index. The article compares the forecasts of consumer prices by applying the VAR, MFVAR and MIDAS models which include data from a high frequency regressor with the forecasts obtained through auto-ARIMA models. The conclusion about the difference in the quality of the short-term forecast of consumer price dynamics in these models is based on the difference of the forecast error indicator of the models. The results provide some evidence that short-term out-of-sample CPI dynamic forecasting becomes more accurate when online price data is included (namely in the class of multidimensional time series models when data is included in the model at a higher frequency). However, the advantage derived from including high frequency online price data in models decreases as the forecast horizon is extended. The results show the importance of including online price data in inflation models in a disaggregated form while forecasting price trends of the nearest future.

The paper provides an ex ante assessment of risks incurred by developing and implementing the Anticartel state information system (GIS), which will conduct automated screening of Russia’s state procurement in order to detect bid rigging (in other words, software analysis of procurement data using algorithms that identify collusion based on certain formal characteristics). The system will also apply artificial intelligence. Determining the risks of implementing this system is difficult because there is no publicly available information on the specific criteria that will be used in this screening process. This forces specialists to make do with partial data. This paper attempts to reconstruct the operating principles of the Anticartel GIS from external sources including public speeches by representatives of the Federal Antimonopoly Service of Russia together with the technical specifications provided to developers entering the competition to build and implement the system. Key questions prompted by examining Anticartel’s reconstructed features are put forward in order to facilitate analysis during an “expedited” regulatory impact assessment based on the assumption that the decision to employ such a digital screening system is irreversible. The questions and analysis will structure discussion of the risks, associated benefits, and costs of different options for implementation. The principal risks result from probable Type I errors in law enforcement and from the extent of their consequences, which will be amplified as the automated screening system rolls out to include the entire body of regulated procurement, as well as by the use of artificial intelligence. The main consequences of this type of error and how it would arise are explained in the article. In addition, certain risks from using digital tools for identifying collusion especially in commodity markets are identified.

Since 2019 Russia has been using a new management tool for improving the efficiency of state expenditures — spending reviews (SR) prepared by the Ministry of Finance to identify opportunities for more economical spending of state budget resources. Although this tool is quite popular among OECD countries, the article highlights a problem common to both OECD countries and Russia: lack of a clear distinction between the goals and objectives of SRs and previously existing ways of analyzing the efficiency of budget expenditures, such as the performance audits performed by the supreme audit institutions created by parliament as well as executive branch analyses of the efficiency of projects and programs carried out as part of performance-oriented budgeting. The main purpose of the article is to situate spending reviews among the other tools for managing budget expenditures and to address other problems that can affect the usefulness of spending reviews. The article analyzes the advantages and disadvantages of various options for delineating the functions and tasks of reviews and of audit or performance analyses carried out by the Accounts Chamber and the Ministry of Economic Development of Russia. Ways to select targets for review and to determine the content of various types of review are then proposed. The article also recommends legislative changes needed to increase the integration of SRs into the overall budget process so that their findings may be taken into account when modifying state programs and making budgetary allocations for the coming year. The article concludes that the reviews should be openly published and provide mechanisms for verifying the implementation of the decisions taken based on their results.

The Belt and Road Initiative is one of the most consequential international projects of the People’s Republic of China; it is intended to ensure its economic development and align with its foreign policy interests. Over the last seven or eight years, the Chinese leadership has adjusted the country’s socio-economic development guidelines in response to new internal and external challenges, and these modified guidelines have changed the environment in which the Belt and Road is being implemented. The article analyzes official party and government materials together with publications by Chinese researchers in order to assess how the implementation of the Belt and Road has changed as the Chinese economy makes the transition from rapid to “high-quality” growth, is exposed to increased internal and external risks, and follows its “dual circulation” strategy and “new quality productive forces” model. What follows from examining those sources is that this new developmental stage will emphasize applying transparent standards for China’s trade and economic cooperation with other countries and for improving coordination between Chinese enterprises taking part in the initiative. The article notes the development of a more cautious approach to investing in large-scale infrastructure projects and the urging by the People’s Republic of China leadership that Chinese companies keep track of the costs of their economic activity abroad. The importance of the Belt and Road for implementation of the dual circulation strategy becomes clear in light of China’s lagging transition to an economic model based on domestic consumption. The Belt and Road’s role in forming chains of production and technology that are linked to China as well as in testing and building upon advancements in Chinese science is also discussed. China’s economic partners may in the medium term face a more cautious approach from Chinese enterprises toward expanding cooperation within the Belt and Road Initiative, a factor which Russia should also take into account when building trade and economic cooperation with the People’s Republic of China.

The article provides an overview of Egor Frantsevich Kankrin’s treatise “World Wealth and National Economy,” which had its first translation into Russian under that title and was then published in 2018 as part of the series “Finance Ministers: From the Russian Empire to the Present Day.” Kankrin was Minister of Finance of the Russian Empire from 1823 to 1844, and his essay outlined his views and approaches to understanding basic economic categories (wealth, money, production, etc.). Using those ideas, he arrived at recommendations for running a state economy based on financial management and “statesmanship.” Kankrin’s views can be called eclectic, as they contain elements of classical political economy and physiocracy but were also clearly influenced by cameralist views. His practical recommendations for changing the economic situation are presented in the review “Notes Compiled in 1818 at the Behest of [Tsar] Alexander Pavlovich on the Liberation of Peasants in Russia From Serfdom,” which provides the rationale for a lengthy (approximately fifty-year) strategy for liberating peasants from serfdom. The article highlights pivotal stages in Kankrin’s life and traces his evolution as both a scholar-economist and a government official and examines the historical context of his career. An analysis of the monetary reform of 1839–1844 that he enacted provides a case study of his ministerial tenure. A systematic classification of the productive forces and state taxes singled out by Kankrin is provided along with critiques of his ideas and of their implementation in public service. Finally, the article offers a general assessment of Kankrin’s contributions to economic science and practice.