Russian Journal of Money and Finance

The impact of an ageing population on inflation, and should the Bank of Russia publish key rate forecasts: the 4th issue of RJMF

Changes in the age structure of the population can influence long-term trends in inflation. Darya Antonova and Yulia Vymyatnina of the European University at St. Petersburg have discovered that the impact of an ageing population on inflation is in fact different in developed countries, on the one hand, and emerging market economies, on the other. Their article can be found in the fourth issue of the Russian Journal of Money and Finance. It is only in recent years that economists have begun focusing on the connection between inflation and the population age structure; existing studies have shown that, in developed countries, an increase in the proportion of elderly people in the population is deflationary, while an increase in the proportion of working-age people is inflationary. Antonova and Vymyatnina find the opposite in their paper, the first piece of research based on a panel of data for emerging market economies.

Another area of contemporary research is forecasting using big data. Ksenia Yakovleva of the Bank of Russia concludes that analysis of news data using text mining and machine learning methods can help to forecast economic activity, but also to develop indicators which respond faster to the current economic situation than conventional statistical indicators. The paper by Ivan Baybuza of Ludwig Maximilian University of Munich is one of the first attempts to apply machine learning methods to forecasting inflation in Russia. These methods give results comparable to those produced by traditional models.

In September, the Bank of Russia held a joint workshop with the International Monetary Fund in Moscow on macroprudential stress testing. Our colleagues from the Financial Stability Department of the Bank of Russia have written a review on the workshop, including a review of the key findings of the studies presented by participants from the national banks of Poland, Japan, Brazil, Mexico, Turkey, Indonesia, France, the Republic of Korea, and Austria, as well as by representatives of the ECB and the IMF.

The fourth issue of the RJMF concludes with an academic discussion: should the Bank of Russia publish key rate forecasts? In one of the previous issues of this journal, Ksenia Yudaeva, First Deputy Governor of the Bank of Russia, explained why it is better to avoid forward guidance (when the central bank publishes key rate forecasts with the aim of better communicating their inflation targeting policy). In this issue, economists Alex Isakov, Petr Grishin, and Oleg Gorlinsky argue against Yudaeva’s position, considering examples of central banks which do publish such forecasts.

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