This lecture was delivered in November 2018 at Financial university in Moscow, Russia, to the faculty and students. using some current policy debates as illustrations, it describes the social scientist’s mission, and how economics can deliver the common good.

Jean Tirole, the Nobel Prize winner in Economic Sciences in 2014, who in November 2018 visited the Financial university in Moscow, presents one of the most striking examples of the evolution currently experienced by some modern economists. He started his career as an economist at the time of rapid development of theories of regulation and competition policy. It was also the time of intensive development of industrial organisation (industrial economy), and especially its branch oriented to the public policy issues — economic regulation, antitrust law, and, more generally, economic governance of law in defning property rights, enforcing contracts, and providing organisational infrastructure. The progress in these areas reflected two methodological breakthroughs: the game theory and the theory of mechanism design. The widening use of game theory in industrial economics led to the migration of its achievements into other branches of microeconomics, such as behavioural economics and corporate fnance. In 1978, Jean Tirole left for the uSA to get a PhD in Economics at the Massachusetts Institute of Technology (MIT). He began his formation as an economist. The article tells about Jean Tirole’s way from an engineer and mathematician to the world-class economist. The author has paid special attention to the traditions of the French economic science, which had a considerable impact on the main areas of scientifc interests of Jean Tirole. Tirole’s managerial skills allowed to build an entire scientifc school around him both at the university of Toulouse and the Jean-Jaques Laffont Foundation, and in the newly formed Institute for Advanced Research.

Project fnance of infrastructure (e.g. exploitation and transportation of natural resources, high speed railways, internet) forms a basis for the peaceful development and the prosperity of nations as well as the transnational community. What is needed are dependable networks in a world in transition, where digitalisation and new powers demand joint action. Particularly in the Eurasian region, from Lisbon to Vladivostok, felds with future prospects are opening up for Russia, Germany and the European union. We can develop them through investment and cooperation, by building up trust through common rules and sustainable substance. Here, a concept for this is presented for “Intercultural Project Finance”: An order of law and business (order of assets; German: Vermoegensordnung), in which state and private actors build up the necessary trust and are able to co-operate and proft transnationally for the good of the common prosperity of all peoples. A key element of a suitable system for the investment of capital (transnational investor protection law) is a sustainable valuation law; this has to be developed and etablished by legal comparison. In the following, relevant aspects for theory and practice which are basic for the actors of infrastructure project fnance will be shown, as well as the new initiative of the European union regarding “Connectivity”.

We assess investment value of stock recommendations from the standpoint of market risk. We match I/B/E/S (Institutional Brokers’ Estimates System) consensus recommendations issued in January 2015 for a cross-section of u.S. public equities with realized volatility of these papers, showing that these recommendations signifcantly correlate with subsequent changes in market risk. Thus, the results indicate that to some extent the analysts can predict an increase or decrease in risk, which can beneft asset management. However, the relationship between the recommendations and the risk is not linear and depends on the specifc recommendation. using a semi-parametric copula model, we fnd recommendation levels to be associated with future changes in volatility. We further fnd this relationship to be asymmetric and most pronounced among the best-rated stocks which experience largest volatility declines. We conduct a trading simulation showing how stock selection based on such ratings can lead to a reduction in portfolio-level value-at-risk.

The relationship between optimal, threshold and target inflation regarding the inflation targeting policy has been analyzed on the example of some countries. The objective of the article is to identify the features of achieving the inflation target by countries with different levels of economic development. As part of the descriptive analysis, the country comparison method has been applied according to the parameters of estimated inflation thresholds, actual targets and permissible targeting ranges, sustainability of targets and time periods. In terms of the case study approach, countryspecifc factors for changing the inflation target and the threshold inflation rate have been studied. The relationship between optimal, threshold and target inflation has been substantiated. The experience of achieving the inflation target in 17 countries in 2009–2018 has been presented. The actually targeted and estimated threshold levels of inflation have been compared. The article reveals the features of achieving the inflation target by countries with different levels of disclosure and economic development. It has been concluded that the inflation threshold level is the upper limit of the actually established target inflation rate or its range. Despite the downward trend in estimates of the threshold level, the downward trend in target inflation has not been pronounced. Open economy and sensitivity to changes in external conditions is a precedence factor of interest rate policy specifc to emerging market countries. As a result, the countries have to choose more flexible policy, accommodative inflation targeting, or the policy of “leading indicators”. It is focused primarily on managing inflation expectations. Despite the ambiguity of the external environment, the inflation targeting policy in Russia retains the potential for anchoring inflation expectations at a chosen target level.

The relevance of the research subject is due to the fact that countries look for adaptive approaches to the turbulence of the international monetary system (IMS). The approaches of the BRICS countries to the IMS transformation have been fully studied in the economic literature. However, there are no researches on foundation of an advanced central bank as an alternative supranational monetary institution in the new international fnancial architecture. The article objective is to develop a mechanism for setting up the refnancing rate for the BRICS countries in case of the integration hypothesis the currency union, and the lender of last resort and the general unit of accounts. A liberal pricing method has been used to create the model. There is a hypothesis that the refnancing rate should be set at a higher level than that of the People’s Bank of China’s and lower than that of Brazil, Russia, India and South Africa’s, since it has comparative advantages in crediting. The mechanism of the consensual rate of the BRICS countries is based on the assumption that the amount of money in circulation may vary by an amount that does not cause negative consequences for national economies. The fundamental difference between the results of this study is in optimization of the credit resources flow, which implies their distribution within certain limits and in several stages. The main provisions indicate that the optimal rate may provide a background for the coordination of monetary policies in the BRICS countries within the Central bank. The practical relevance of the model is that it can be used to establish the refnancing rate in the BRICS countries. The model suggests that the optimal crediting value in the BRICS countries should ft the GDP growth limits. To conclude, the optimal refnancing rate is a key issue in forming a monetary union and a common currency in the BRICS countries.

The objective of the article is to propose a new approach to assessing and forecasting fnancial condition of credit institutions and to early detection of those that have high risks of license revocation. An integrated reliability index of credit institutions has been revealed by the method of the main components of the factor analysis. Credit institutions have been clustered by means of the k-average method. It has been established that acting credit institutions at a relatively small Euclidean distance from the mathematical expectation of credit institutions, liquidated at a given moment of time, bear potential risks of engaging in illegal activities, money laundering and terrorist fnancing. Constructed regression models allow forecasting deterioration of credit institutions by the nature of the change in the integrated reliability index. The author concludes that this approach makes it possible to identify potentially problematic credit institutions requiring appropriate measures from the Central Bank of the Russian Federation through prudential supervision functions.

Problems in tax administration, especially direct taxation, are one of the most important challenges for the taxation system of Armenia. The high level of the informal sector further affects the effective functioning of the system and the replenishment of the state budget. In this regard, there is a need for reforms in direct taxation presented in this article. The research objective is to evaluate possible effects of abolishment of proft tax in the Armenian economy. For this purpose, we approached the neoclassical dynamic general equilibrium model presented in expanded form and in discrete time. Impact assessment of the reforms in corporate taxation system in Estonia and Georgia was also based on the same model. Therefore, after the effects of the abolishment of proft tax in the Armenian economy are assessed, a comparative analysis of the results observed with those of Estonia and Georgia will be conducted. The model calculates the effect of changes in income tax rates on government revenues, capital per unit of labor, level of consumption and output in the country. The article also presents the parameterization of the model considering the specifcs of the Armenian economy. The study has revealed that reforming the taxation system for organizations in Armenia will lead to an increase in the general welfare of the population, net investments and aggregate output. At the same time the tax revenues of the state budget of Armenia will decrease by 3.92%. The results of the study will allow the government of Armenia to apply a new approach to taxing the profts of organizations. It will lead to an increase in the transparency of business, a decrease in the level of corruption and the concealment of the profts.

The authors have formulated and consistently proved the hypothesis that well-functioning interaction of tax and customs authorities is required to increase the effciency of the state revenues administration. The mechanism of this interaction should be formed when implementing the standards of the World Customs Organization and the World Trade Organization into the Russian legislation. The research is particularly relevant since Federal Law No. 289 of 03.08.2018 “On Customs Regulation” has entered into force. This law includes article 222 “Interaction and cooperation of customs and tax authorities”. As scientifc and practical results, promising areas for development have been worked out: improving unifed mechanism of customs, tax administration and currency control based on integrated innovative technologies; implementing international standards developed under the auspices of the World Customs Organization; creating prerequisites for the transition to the payment of import customs duties and taxes after the release of goods for law-abiding business; redistributing functions of customs and tax authorities. The authors propose to leave the control of import duties payments for the customs authorities, and to delegate the control of VAT and excise taxes on imported goods payments to the tax authorities. The article includes the results of a comparative legal analysis of the acts of the World Customs Organization, the Financial Action Task Force on Money Laundering (FATF), the Organization for Economic Cooperation and Development (OECD) and the Agreement on Cooperation of the Federal Customs Service and the Federal Tax Service of Russia. It justifes the conclusion that the studied cooperation is the most important tool for the customs payments administration. This is confrmed by the statistics on additional and pre-leased revenues to the state budget based on the results of joint and coordinated verifcation activities. The result of the study is the formulation of promising areas for improving the interaction of customs and tax authorities in the Eurasian Economic union (EAEu) and Russia.

The research is devoted to the modern enhancement of budget allocation effciency at the municipal level. Internationally, it is referred to as participatory budgeting. The subject of the research is the world and Russian experience of participatory budgeting and the effectiveness of such initiatives. The research objective is to determine the correlation between the international experience of public participation in the budget allocation and the program of initiative budgeting in the Russian Federation; based on this, to develop recommendations for improving the effciency of budget expenditures. The theoretical basis and the relationship between the concepts of “participatory budgeting” used to denote public participation abroad, and the “proactive budgeting” adopted in Russia have been considered. More than 30 international studies of participatory budgeting over the past 15 years have been analyzed. The aspects and effectiveness of the approaches have been highlighted. The best international and Russian experiences of participatory (initiative) budgeting, their characteristics and commitment to results have been identifed. As a result, the authors have presented a basic scheme to organize the participatory budgeting process, highlighting the stages, activities and criteria for the effectiveness of programs implemented within this approach. The initiative budgeting perspectives in Russia have been shown on the example of Yekaterinburg. Some recommendations have been given to enhance the implementation effciency. Among them are: infrastructural differences between the territories, expanding fnancial independence of municipalities in terms of initiative budgeting, building a system of representatives of local communities. It has been concluded that the initiative budgeting in the Russian Federation differs notably in its form from the international initiatives. The main difference is the requirement to the population and business to co-fnance projects. Some measures have been proposed to move gradually from the Russian participatory budgeting to the international standards, including: developing a methodology for project effciency evaluation, providing tax incentives, extensive use of information technology, and introducing the annual schedule of meetings and polls.

Companies implementing R&D projects face their unique features. There is the need for large capital investments, long-term implementation, high growth potential, low probability of success, and diffculties in fnancing among them. Implementation of such projects is associated with high risks. This leads to underfunding as uncertain results deter investors. The problem of assessing the risks arising from the implementation of such projects has not yet been suffciently studied at the level of mathematical analysis models. The objective of the article is to develop a model allowing to explore the risks arising from implementing R&D projects. The author has developed a risk assessment model using the VaR measure modifed for this application. The formulas have been obtained to calculate this measure. They have been adjusted to simple analytical expressions assuming the balanced distribution of cash flow from the project, or triangular distribution. The model considers the most important causes of risks in R&D projects. It can be used in a real-case scenario if a preliminary risk assessment of a project is done before its implementation and a decision is made on risk-based implementation. Moreover, this methodology can be used to standardize the decision-making process for the R&D projects implementation considering the “risk appetite” using the VaR risk measure.

The article discloses the issues related to the manipulation of earnings (earnings management) by Russian companies at the initial public offering (the initial public offering, hereinafter IPO). The ability to manage earnings is initially embedded in accounting standards that allow various accounting alternatives. The earnings management virtually can be not only legal, but also illegal (fraudulent). Illegal earnings management can also lead to bankruptcy. Considering possible negative effect for both the company and its counterparties, it should be analyzed when the earnings management is used and by what means. The increase in capital attracted to a company as a result of IPO is traditionally regarded as one of the most common reasons for the earnings management. The issue has been actively studied by foreign researchers (primarily in developed markets) while Russian companies basically lack such studies. This fact makes the current work relevant. The objective of the article is to determine the accounting tools for the earnings management in Russian companies at the initial public offering. The research has used a sample of 66 Russian companies that carried out IPOs on Russian trading floors from 2004 to 2016. For the analysis, a peer company which did not make an IPO in the corresponding year was selected for each of these companies. The necessary information has been collected from the SKRIN, Thomson Reuters, Prequeca and Zephyr databases. Correlation and regression analysis and mean-comparison statistical tests have been used. According to the study results, Russian companies manage earnings in the year of their IPO. In the same year, the IPO companies show higher values of abnormal receivables and inventories compared to the peers which did not make an IPO. This result indicates the intention of the companies offering the shares to inflate their profts. The article also shows that the earnings management level of IPO frms is inversely related to the subsequent proftability of the company’s shares both within three-year and fve-year periods. The research results are signifcant for a wide range of external users of the company’s accounting information. In particular, potential investors can consider the results while analyzing the frms whose shares they intend to buy at the IPO. Government bodies can use the relevant results to analyze the feasibility of changes in accounting standards, as well as in the legislation regulating the placement of securities by companies.