Series:BEROC Miscellaneous Papers

Exploring SVAR-based empirical Measure of Inflation Expectations for Belarus: Implications for Monetary Policy

Свойства и характеристики SVAR-индикатора инфляционных ожиданий для Беларуси: последствия для монетарной политики

Author(s): Dzmitry E. Kruk / Language(s): English

Keywords: inflation expectations; empirical measures of inflation expectations; monetary policy; Belarus;

This article explores empirical SVAR-based measure of inflation expectations for Belarus. Properties of this measure result in a diagnosis that inflation expectations in Belarus are highly volatile and unanchored. Level shifts in inflation expectations give a rise to a specific phenomenon of Belarusian monetary environment which is multiple regimes of functionality with severely different properties. This sensitively restricts the effectiveness of monetary policy in the country. Hence, stabilizing inflation expectations at a reasonably low level and anchoring them is argued to be an important precondition for effective monetary policy in Belarus.

Screening as a Unified Theory of Delinquency, Renegotiation, and Bankruptcy

Screening as a Unified Theory of Delinquency, Renegotiation, and Bankruptcy

Author(s): Natalia Kovrijnykh,Igor Livshits / Language(s): English

Keywords: Default; Delinquency; Bankruptcy; Renegotiation; Adverse Selection; Screening; Consumer Credit; D14; D82; D86; G18; G21;

We propose a parsimonious model with adverse selection where delinquency, renegotiation, and bankruptcy all occur in equilibrium as a result of a simple screening mechanism. A borrower has private information about her cost of bankruptcy, and a lender may use random contracts to screen different types of borrowers. In equilibrium, some borrowers choose not to repay, and thus become delinquent. The lender renegotiates with some delinquent borrowers. In the absence of renegotiation, delinquency leads to bankruptcy. Presence of competition may induce the incumbent lender to renegotiate even when he would not do so in the monopoly setting. We apply the model to analyze effects of a government intervention in debt restructuring. We show that a mortgage modification program aimed at limiting foreclosures that fails to take into account private debt restructuring may have the opposite effect from the one intended.

Commitment to Equity for Children: Redistributive Effects and Efficiency of Social Assistance to Households with Children in Belarus

Commitment to Equity for Children: Redistributive Effects and Efficiency of Social Assistance to Households with Children in Belarus

Author(s): Kateryna Bornukova,Jose Cuesta,Gleb Shymanovich / Language(s): English

Children are explicitly targeted by social policy in Belarus, as child-related benefits constitute a major part of the public direct transfers. Despite this, households with children are among the social groups most vulnerable to the risk of absolute poverty and multidimensional poverty in Belarus. This paper seeks to inform the understanding of the distributional impact of taxes and public spending on children in Belarus. The analysis reveals that current child benefits system is geared towards supporting the families with children aged 0-2, which leads to crucial gaps and shortfalls in coverage of the most vulnerable groups: households with three or more children, single-parent households, and children aged 6-9. Besides, households with children often bear a heavier-than-average tax burden as compared to the general public. Therefore, the design of the social assistance to the households with children needs improvement, in particular, by means of development of targeted social assistance and introduction of vulnerable group-specific benefits for, inter alia, households with three or more children, and single-parent households.