Work in progress:
“Growth at Risk in Aruba and Trinidad and Tobago”. IMF, Washington, DC. (forthcoming)
“Drivers of Inflation in Aruba and Trinidad and Tobago”. IMF, Washington, DC. (forthcoming)
“Climate Change Challenges in Latin America and Caribbean”. IMF, Washington, DC. (forthcoming)
Completed work:
Bespalova O., J. Chow, A. Soler. (2023) “Measuring Reserves and Assessing Reserves Adequacy”. Published ion March 30, 2023, in Panama: Selected Issues Paper (2023), IMF, Washington, DC.
Measuring reserves and assessing reserves adequacy in fully dollarized economies can be challenging. These countries differ, not only because of the multiple roles played by reserves, but also the complexity in quantifying external risks and vulnerabilities as well as the opportunity costs that they face. This paper discusses the challenges and judgements needed in measuring reserves and assessing their adequacy in dollarised economies, and presents an illustrative measure for Panama that combines liquidity buffers held by domestic financial institutions and the central government. In essence, the need for reserves in Panama arises as precautionary liquidity buffers to support domestic financial institutions in the event of a liquidity stress in the banking sector and for government financing.
Appendino M., Bespalova O., Bhattacharya R. et al. (2023). “Crypto Assets and CBDCs in Latin America and the Caribbean: Opportunities and Risks” (2023). IMF Working Papers 2023/037, IMF, Washington DC
After providing a general overview of the nature, pros, and cons of crypto assets and CBDCs, this paper focuses on documenting their recent experience in LAC. The region records a high interest in unbacked crypto assets and stablecoins and its authorities’ policy responses have varied substantially, ranging from the introduction of Bitcoin as legal tender in El Salvador to their prohibition in many other countries worried about their impact on financial stability, currency/asset substitution, tax evasion, corruption, and money laundering. This paper also describes briefly the results of a survey on CBDCs’ introduction plans and crypto assets regulation. Finally, this paper presents some general lessons and policy recommendations for the region on the regulation of cypto assets, digital currencies and cross-border payments, and on the potential introduction of CBDCs.
Bespalova O. (2022). “Modeling and Forecasting Monthly Tourism Arrivals to Aruba Since COVID-19 Pandemic” (2022). IMF Working Papers 2022/226, IMF, Washington DC
This paper improves short-term forecasting models of monthly tourism arrivals by estimating and evaluating a time-series model with exogenous regressors (ARIMA-X) using a case of Aruba, a small open tourism-dependent economy. Given importance of the US market for Aruba, it investigates informational value of Google Searches originating in the USA, flight capacity utilization on the US air-carriers, and per capita demand of the US consumers, given the volatility index in stock markets (VIX). It yields several insights. First, flight capacity is the best variable to account for the travel restrictions during the pandemic. Second, US real personal consumption expenditure becomes a more significnat predictor than income as the former better captured impact of the COVID-19 restrictions on the consumers’ behavior, while income boosted by the pandemic fiscal support was not fully directed to spending. Third, intercept correction improves the model in the estimation period. Finally, the pandemic changed econometric relationships between the tourism arrivals and their main determinants, and accuracy of the forecast models. Going forward, the analysts should re-estimate the models. Out-of-sample forecasts with 5 percent confidence intervals are produced for 18 months ahead.
Bespalova O. (2021) “Financial Integrity and Tax Transparency”, Annex VII in Trinidad and Tobago: 2021 AIV Staff Report , IMF, Washington, DC.
Since 2015, Trinidad and Tobago’s authorities have implemented reforms to strengthen financial integrity and enhance tax compliance and information exchange. Decisive actions and an overhaul of the anti-money laundering and combating terrorism financing (AML/CFT) framework helped the country leave the Financial Action Task Force (FATF)’s grey list in February 2020. The government is committed to sustaining the effectiveness of its AML/CFT regime and improving it further. With the objective of resolving identified deficiencies related to the tax regime they have passed the Gambling Control and the Revenue Authority Bills and moved forward to implement the property tax reform and update the free trade zones regime. However, to comply with the OECD and the EU additional actions are required.
Bespalova O. (2021) “Aruba Financial Sector - Background Note”. Unpublished manuscript, IMF, Washington, DC.
Aruba’s financial sector is almost three times larger than its tourism-dependent economy, and its resilience is critical for domestic macroeconomic stability and post-pandemic recovery. This note overviews the structure and regulatory framework of Aruba's financial system, the short-term impact of the COVID-19 pandemic, and options to improve financial oversight and safety nets.
Bespalova O. (2021) “The COVID-19 Pandemic in Aruba”, Annex II in Kingdom of the Netherlands—Aruba: 2021 AIV Staff Report, IMF, Washington, DC.
Aruba registered its first COVID-19 infection on March 13, 2020. The authorities implemented strict measures to contain the virus's spread, including closing the borders, which significantly decreased domestic mobility and flight capacity. The gradual reopening of the economy has been staggered due to the renewed spread of infection after the relaxation of policies started in May. While Aruba has the highest per capita infection rate in the Caribbean region, that may reflect high testing capacity and a high incidence of infected visitors. The healthcare system remains resilient, which is also evident from a low number of total COVID-19 fatalities.
Bespalova O. (2021) “Growth Accounting and Potential Output Estimates in Aruba”, Annex VI in Kingdom of the Netherlands—Aruba: 2021 AIV Staff Report, IMF, Washington, DC.
Aruba’s income per capita, although still the second highest in the Caribbean, is on a declining path due to the subdued growth in the past two decades. A growth accounting exercise suggests that a persistent decline in total factor productivity (TFP) has been dragging the economy despite healthy growth in employment and the capital stock. Decisive structural reforms will help halt the decline in TFP, reversing its negative trend and positively contributing to economic growth in 2021-2025.
Bespalova O. (2020). "GDP forecasts: Informational asymmetry of the SPF and FOMC minutes". International Journal of Forecasting, Elsevier, vol. 36(4), pages 1531-1540.
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 the already published SPF forecasts.
Bespalova O. (2020). “Towards a More Resilient Financial Sector”, published in “Panama - Selected Issues”, IMF, Selected Issues Paper, Washington, DC.
Panama is a small and fully dollarized economy that positions itself as a regional international banking center. The resilience of its banks (which hold assets double the size of its GDP), is critical for domestic macroeconomic stability. Conservative banking and improvements in supervision and regulation have helped Panamanian banks to remain sound. However, increasing complexity and concentration in the banking system call for strengthening the regulatory framework to further safeguard financial stability. This paper suggests policy options to make the financial sector more resilient. First, it provides an overview of the financial system and recent trends, summarizes financial stability oversight and the prudential framework, analyzes the implementation of Basel III standards, and proposes steps to improve financial oversight and update the macro-prudential toolkit. Then, it advocates the introduction of an effective financial safety net and upgrading the bank resolution framework. Finally, it advises advancing regulatory framework reforms and coordination, and creating a regulatory sandbox for the growing fintech industry.
Bespalova O. and M. V. Rousset (2019). "Macrofinancial Linkages and Growth-at-Risk in the Dominican Republic". IMF, Washington DC, Working paper 19/246.
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.
Bespalova O. G. (2018). “Essays on Forecast Evaluation in Macroeconomics and International Finance”. The GWU. ProQuest Dissertations Publishing, 10751774.
An Evaluation of the Directional Accuracy of the WES U.S. Macro Forecasts (2018). Ch. 1 in “Essays on Forecast Evaluation in Macroeconomics and International Finance”, Ph.D. Thesis, (Washington, DC: The GWU). ProQuest.Presented at 35th International Symposium on Forecasting, 21st Federal Forecasters Conf. This paper contributes to the literature on the 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 that combines the ROC curves analysis with the traditional 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 a 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 indicator is 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).
The Good, the Bad, and the Ugly…signals of currency crises: Does signal approach work in ex-ante forecasting of currency crises? (2018). Ch. 2 in “Essays on Forecast Evaluation in Macroeconomics and International Finance”, Ph.D. Thesis, (Washington, DC: The GWU). ProQuest. presented at 22nd Federal Forecasters Conf. This paper 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 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 employ modified ROC curves to display the relationship between the precision of sent signals and recall of crisis episodes. Finally, I propose forecast combinations to improve forecast accuracy.
Bespalova O. (2015). “Macroeconometric Modeling and Forecasting the GDP and Net Trade Balance of Russia”. Unpublished manuscript. Washington, DC: The GWU.
Bespalova O. (2014). “Do the Renewable Portfolio Standards (RPS) promote Renewable Electricity Generation in the USA? Evidence from a Panel Data Econometric Study.” Dialogue, United States Association for Energy Economics, vol. 22 (1).
Bespalova O. (2011). “State Policies Can Cut Energy Dependence” , Economic Bulletin of American Institute for Economic Research, Vol. LI (December 2011).
Bespalova O. G. (2011). “Renewable Portfolio Standards: Experience and Compliance with Targets.” Master’s Thesis, Manhattan, KS: KSU.
The growing dependence of the U.S. economy on energy imports 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, 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 seven states have goals; but only about two-thirds of them have set quantitative targets. I analyze which factors affect the probability of compliance, with the focus on the role of penalty size, controlling for complimentary policies promoting renewable energy production. Using a fixed-effects linear probability model and state-level data, I find that a penalty in the RPS design significantly increases the probability of states to comply with their goals.
Bespalova O. G. (2010). “Renewable Portfolio Standards in the USA: panel data evidence of factors determining policy adoption.” Unpublished manuscript, Manhattan, KS: KSU.
Bespalova O. (2008). “Methods of reliability tariffs differentiation”. Bulletin of Free Economics Society of Russia, 85 (2), 116-121
Bespalova O. and S. Hall (2007). “Distance learning in the modern higher education”. Proceedings of the annual Conference “Modern Problems of Economics: Theory and Practice”. Astrakhan, Russia: ASTU Press, 160-166
Bespalova O. and M. Littman (2007). “Teaching methods in Business and Marketing education: Student-Centered vs. Teacher-Centered?” Proceedings of the Annual Conference “Modern Problems of Economics: Theory and Practice”. Astrakhan, Russia: ASTU Press, 167-170
Bespalova O. and G. Netreba (2006). “History of Russian Economy”. Astrakhan, Russia: ASTU.
Bespalova O. (2005). “Modern tendencies of the market development in the electric power industry”. Bulletin of Astrakhan State Technical University, 27 (4), 125-133
Bespalova O. (2003). “Problems of the electric power industry”. Proceedings of the ASTU Economics Club Conference “Science: Search 2003”. Astrakhan, Russia: ASTU Press, 17-19