Olga Bespalova | International Monetary Fund (original) (raw)

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Papers by Olga Bespalova

Panama - Selected Issues, 2020

This paper on Panama was prepared by a staff team of the International Monetary Fund as backgroun... more This paper on Panama was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on March 9, 2020.

Economic Bulletin of American Institute for Economic Research, 2011

Each summer a group of student fellows apply AIER's brand of unbiased, independent research to co... more Each summer a group of student fellows apply AIER's brand of unbiased, independent research to contemporary economic questions.

The George Washington University. ProQuest Dissertations Publishing, 2018

This dissertation shares three common themes: (i) forecasting rare macroeconomic events, i.e. GDP... more This dissertation shares three common themes: (i) forecasting rare macroeconomic events, i.e. GDP declines and currency crises; (ii) the use of non-parametric methods to evaluate binary indicators, in particular, the advantages of the analysis of the Receiver Operating Characteristic (ROC) curves; and (iii) value of qualitative information from expert surveys and textual analysis in macroeconomic forecasting.
Chapter 1 contributes to the literature on evaluation of the qualitative survey directional forecasts using the World Economic Survey (WES) for the U.S. economy in 1989q1-2015q4. I offer a methodology which combines the ROC curves analysis with the traditional analysis of the contingency tables. I propose criteria to assess in-sample and out-of-sample directional predictive value of the binary indicators, including directional forecasts from the qualitative surveys. I find that the WES has high out-of-sample value in forecasting movements in GDP and consumption, and moderate for imports, trade balance, inflation, and short-term interest rate. It has no value in predicting changes in investment and exports. I also motivate and confirm that the WES Economic Climate (EC) indicator is as a more accurate predictor of future movements in the real GDP than future expectations alone. Additionally, I show that the ROC-optimal thresholds yield more accurate predictions than their alternatives proposed by Hutson et al. (2014).
Chapter 2 re-examines indicators of currency crises suggested by Kaminsky and Reinhart (1999) and subsequent studies using the ROC curves analysis. I utilize a training set (1975-1995) to confirm a list of indicators with the in-sample predictive value, and test their out-of-sample using data for 1996-2002. Four variables have both in-sample and out-of-sample predictive value: the deviation of the real exchange rate (RER) from a trend, the foreign reserves, the ratio of broad money M2 to reserves, and the decline in exports. I show that the ROC-optimal thresholds issue more accurate signals than the minimum noise-to-signal ratio previously used in the literature. I also employ modified ROC curves to display the relationship between the precision of sent signals and recall of crisis episodes. Finally, I propose forecast combinations using several ad-hoc rules which help to improve forecast accuracy.
Chapter 3 contributes to the discussion of asymmetric information about the U.S. economy between the Federal Reserve System (FRS) and the Survey of Professional Forecasters (SPF) via textual analysis of the Federal Open Market Committee (FOMC) minutes. It builds on Stekler and Symington (2016), who scored the texts of the FOMC minutes in 2006-2010 to produce the indexes for the current and future outlooks and their calibrations to the U.S. real GDP. I extend their timeseries adding 26 years of observations to cover 1986Q1-2016Q4. Following Ericsson (2016), I interpret the derived calibrations (FMIs) as elicitcasts of the Greenbook (GB) forecasts. Results indicate that the FMIs are unbiased, efficient, rational, and contain the same informational advantage as the GB forecasts. The forecast encompassing tests suggest that both the FMIs and the SPF forecasts contain their own unique knowledge and can learn from each other. I find that the SPF forecasters already pay close attention to the FOMC minutes available to them at the time of forecast deadline and efficiently use its information in their set. Yet, they could improve their forecasts should the FOMC minutes from the first quarterly meetings become available without a three-week publication lag. During their second quarterly meetings, the FOMC policy-makers accounted only for their own earlier assessment of the U.S. macroeconomy – they did not put weight on the SPF forecasts released a few weeks earlier in the same quarter. The results are robust to the use of alternative scale. Overall, I find that directional forecasts are informative. The qualitative WES survey can produce accurate directional macroeconomic forecasts. The ROC curves analysis helps to set an association between the consensus scores and the growth rates as well as to find accurate indicators of currency crisis. The qualitative statements from monetary policy deliberations can be converted in to the GDP growth forecasts with unique information about the US economy.

International Journal of Forecasting, 2020

This paper emphasizes asymmetric information about the U.S. economy between the FOMC and SPF. Fol... more This paper emphasizes asymmetric information about the U.S. economy between the FOMC and SPF. Following Stekler and Symington (2016), it extends their text-based FOMC minutes index (FMI) of economic outlook to 1986-2016. Following Ericsson (2016), it employs truncation adjustment indicators and reinterprets the FMI calibrations as the policy-makers forecasts of the GDP growth, which carry information about the staff Greenbook forecasts prepared prior to the bi-quarterly FOMC meetings. Tests confirm unbiasedness and rationality of these forecasts. The encompassing tests indicate that both the FMI and SPF forecasts contain unique information beyond their alternative’s information set and can be weighted equally. The orthogonality tests suggest that the SPF efficiently use all their information set but could gain if the FOMC minutes were published without a lag, while the policy-makers rely mostly on their projections made earlier in the meetings, and could benefit from incorporating t...

Energy Dialogue, 2014

Renewable Portfolio Standard (RPS) is a widely implemented and discussed supply side state-level ... more Renewable Portfolio Standard (RPS) is a widely implemented and discussed supply side state-level regulatory policy instrument aimed to promote generation of renewable energy. Existing literature on RPS developed from discussion of an appropriate policy design, its implementation on national versus state levels and factors driving states to adopt the policy to the analysis of its effectiveness and economic impact. The main objective of this paper is to analyze the impact of the RPS on the share of renewable energy in electricity production and to quantify it using the panel data econometrics methods. Existing literature gives contradictory evidence of RPS policy impact on various measures of renewable energy production. It seems that binary RPS indicators (taking value of one if a policy is implemented and zero otherwise) are not good predictors since they do not take into account difference between regional policies, while RPS stringency variable had good explanatory power. In this paper, I propose to use RPS fractional goal as a proxy for RPS stringency, which is easily available and does not require difficult calculations. A set of control variables and econometric model are chosen in line with previous research.

IMF Working Papers

This paper uses the Growth-at-Risk (GaR) methodology to examine how macrofinancial conditions aff... more This paper uses the Growth-at-Risk (GaR) methodology to examine how macrofinancial conditions affect the growth outlook and its probability distribution. Using this approach, we evaluate risks to GDP growth in the Dominican Republic using quarterly data for 1996-2018. We group macrofinancial conditions in five principal determinants, based on 32 indicators. The Dominican Republic’s growth distribution appears most vulnerable to negative shocks to domestic financial conditions, domestic leverage, domestic demand, and external demand, with additional repercussions from the external cost of borrowing in the longer run. Our findings show that domestic monetary policy plays a particularly important role in reducing growth vulnerabilities when the economy is weak.

Thesis Chapters by Olga Bespalova

Kansas State University, 2011

Economic growth requires growth of energy consumption. In the second half of the twentieth centur... more Economic growth requires growth of energy consumption. In the second half of the twentieth century energy consumption began to outgrow its production and the United States. Consequently, we observe growing dependence of the U.S. economy on energy imports which is causing political and economic insecurity; increasing pollution and depletion of natural resources. One way to alleviate these problems is to encourage renewable electricity production. Because the electric power industry is the largest consumer of energy sources, including renewable energy, it has become one of the most frequent subjects of the regulatory policies and financial incentives aiming to stimulate renewable electricity production.
One of the most promoted renewable energy policies in this industry is a renewable portfolio standard (RPS), which requires electric utilities and other retail electric providers to supply a specified amount of electricity sales from renewable energy sources. Currently 29 states and District of Columbia have the RPSs, while 7 states have goals; but only about two third of those with the RPS have certain targets to meet.
To my best knowledge, there are no studies analyzing compliance with the RPSs targets or the role of penalty mechanism in the RPS design on meeting its goal. In my Master Thesis I estimate which states are in compliance with their individual RPSs goals and analyze which factors affect the probability of compliance, with the focus on the role of penalty size, and controlling for complimentary policies promoting renewable energy production. I use a fixed effects linear probability model and state level data. Results indicate that including a penalty in the RPS design significantly increases the probability that states will comply with their goals.

Books by Olga Bespalova

IMF Staff Country Reports, 2019

Background. Panama has had the longest and fastest economic expansion in recent Latin American hi... more Background. Panama has had the longest and fastest economic expansion in recent Latin American history. The economy has expanded at an average rate of about 6 percent per annum over the last quarter of a century, with Panama achieving one of the highest per capita income in Latin America. More recently, GDP grew by about 5½ percent in 2017 (driven by the expanded Canal), and then slowed to 3¾ percent (y/y) in H1-2018. Inflation remained subdued, reaching almost 1 percent (y/y) in September 2018. The external current account deficit stayed at 8 percent of GDP in 2017, mostly covered by FDI. The fiscal position continued to be strong, with the overall deficit of the non-financial public sector (NFPS) at about 1½ percent of GDP. Credit growth has decelerated as financial conditions have started to tighten.
Outlook and Risks. The outlook remains positive. Growth is projected to decelerate to 4⅓ percent in 2018 and to rebound to 6⅓ percent in 2019 before converging to its potential of 5½ percent over the medium-term. However, the balance of risks is tilted to the downside. Domestic risks include reputational risks from potential setbacks in addressing outstanding GAFILAT recommendations and tax transparency initiatives, as well as risks to financial stability and the real sector from the oversupply in property markets and winding down of several large infrastructure projects. External risks include rising protectionism, a sharper-than-expected tightening of global financial conditions that may contribute to an appreciation of the U.S. dollar, and weaker-than-expected global growth.
Policy Advice. Maintain the conditions for sustained growth by preserving Panama’s competitive advantage as an attractive destination for business. Further enhance AML/CFT and tax transparency and information exchange, including criminalization of tax evasion, to prepare for the Global Forum and GAFILAT reviews and solidify Panama’s position as a regional financial center. Preserve fiscal discipline and establish a fiscal council. Ensure adequate buffers to mitigate fiscal risks. Further enhance revenue administration and review of tax exemptions to create space for key social needs. Rebalance expenditure from current to strategic public investment and enhance recording the public investment in fiscal accounts. Continue vigilant monitoring of the financial system and alignment of prudential regulation with Basel III. Enhance the role of the Financial Coordination Council in systemic risk assessment and put in place robust frameworks for macroprudential policy, crisis management, bank resolution and FinTech regulation.