Growing discoordination between monetary and fiscal policies in Ukraine
-
DOIhttp://dx.doi.org/10.21511/bbs.14(2).2019.04
-
Article InfoVolume 14 2019, Issue #2, pp. 40-49
- Cited by
- 1706 Views
-
431 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
The slowdown in economic development caused by the reduction in the efficiency of the functioning of state institutions determined the focus of the governments of most countries of the world on achieving sustainable economic growth, as well as ensuring macroeconomic and macrofinancial stability. A major issue that is dealt with is the weakening of the interaction of monetary and fiscal policies in Ukraine. It can be assumed that one of the reasons hindering economic growth is growing discoordination between monetary and fiscal policies. The purpose of this study is to assess the nature of monetary and fiscal policies in Ukraine in 2000–2017 and justify the need for coordination between them to stimulate economic growth. For the quantitative assessment of the influence of monetary and fiscal factors on GDP, the models of autoregression with distributed lags – ARDL are used. The analysis makes it possible to distinguish and characterize three stages of combining the rigid and stimulating monetary and fiscal policy in Ukraine in 2000–2017. The article examines the influence of the dynamics of the monetary aggregate M3, the inflation rate and the weighted average base interest rate on the growth rates of real GDP in Ukraine, the impact of using the “monetary clamp” effect on the increase in the NBU’s interest rate, and the direct effect of monetary factors on the fiscal policy. The authors conclude that the inconsistency of monetary and fiscal policies is one of the reasons for the high volatility of macroeconomic indicators. The article substantiates the conclusion that it is necessary to overcome the increasing antagonism between monetary and fiscal policies in Ukraine and to strengthen their coordination.
- Keywords
-
JEL Classification (Paper profile tab)E58, Е61 Е69
-
References31
-
Tables2
-
Figures2
-
- Figure 1. Graphic presentation of the real GDP growth rate and the dynamics of the key monetary indicators of Ukraine in 2000–2017
- Figure 2. Graphic presentation of real GDP growth rate and the dynamics of the key fiscal indicators of Ukraine in 2000–2017
-
- Table 1. The dynamics of the key macroeconomic indicators of Ukraine in 2000–2017
- Table 2. The stages of the implementation of monetary and fiscal policies in Ukraine in 2000–2017
-
- Adegoriola, А. Е. (2018). An empirical analysis of effectiveness of monetary and fiscal policy instruments in stabilizing economy: Evidence from Nigeria. Social Sciences, 7(3), 133-140.
- Barro, R. J. (2013). Inflation and economic growth. Annals of Economics and Finance, 14(1), 85-109.
- Bruno, M., & Easterly, W. (1998). Inflation crisis and long-run growth. Journal of Monetary Economics, 41(1), 3-26.
- Chiu, Y.-B., & Lee, C.-C. (2017). On the Impact of Public Debt on Economic Growth: Does Country Risk Matter? Contemporary Economic Policy, 35(4), 751-766.
- Cochrane, J. H. (2011). Presidential address: Discount rates. The Journal of Finance, 66(4), 1047-1108.
- Eberhardt, М., & Presbitero, A. F. (2015). Public debt and growth: heterogeneity and non-linearity. Journal of International Economics, 97(1), 45-58.
- Egert, В. (2012). Public Debt, Economic Growth and Nonlinear Effects: Myth or Reality? (CESifo Working Paper No. 4157).
- Gillman, M., & Kejak, M. (2011). Inflation, investment and growth: a money and banking approach. Economica, 78(310), 260-282.
- Gómez-Puig, M., & Sosvilla-Rivero, S. (2017). Public debt and economic growth: further evidence for the euro area (ICEI WP 09/17). Research Institute of Applied Economics.
- Han, S., & Mulligan, C. B. (2008). Inflation and the size of the Government. Federal Reserve Bank of St. Louis Review, 90(3), 245-67.
- Herndon, Т., Ash, М., & Pollin, R. (2013). Does high public debt consistently stifle economic growth? A critique of Reinhart and Rogoff. Cambridge Journal of Economics, 24, 1-23.
- Hosono, K., & Miyakawa, D. (2014). Business Cycles, Monetary Policy, and Bank Lending (RIETI Discussion Paper Series No. 14-E-026).
- Ibarra, R., & Trupkin, D. R. (2016). Reexamining the relationship be-tween inflation and growth: Do institutions matter in developing countries? Economic Modelling, 52(B), 332-351.
- Laubach, Т. (2009). New evidence on the interest rate effects of budget deficits and debt. Journal of the European Economic Association, 7(4), 858-885.
- Lee, Siew-Peng, & Ng, Yan-Ling. (2015). Public debt and economic growth in Malaysia. Asian Economic and Financial Review, 5(1), 119-126.
- Lioui, A., & Poncet, P. (2008). Monetary non-neutrality in the Sidrauski model under uncertainty. Economic Letters, 100(1), 22-26.
- Mendoza, E. G., & Terrones, M. E. (2008). An Anatomy of Credit Booms: Evidence From Macro Aggregates and Micro Data (IMF Working Paper No. 08/226).
- Mishchenko, S. V., Naumenkova, S. V., & Lon, I. M. (2016). Монетарні цикли в економіці України [Monetarni tsykly v ekonomitsi Ukrainy]. Aktualni problemy ekonomiky, 185(11), 363-372.
- Mishchenko, V., Naumenkova, S., Mishchenko, S., & Ivanov, V. (2018). Inflation and economic growth: the search for a compromise for the Central Bank’s monetary policy. Banks and Bank Systems, 13(2), 153-163.
- Moenjak, T. (2014). Central Banking: Theory and Practice in Sustaining Monetary and Financial Stability. New York: John Wiley & Sons.
- Mollick, A. V., Cabral, R., & Carneiro, F. G. (2011). Does inflation targeting matter for output growth? Evidence from industrial and emerging economies. Journal of Policy Modeling, 33(4), 537-551.
- Panizza, U., & Presbitero, A. F. (2014). Public Debt and Economic Growth: is there a Causal Effect? Journal of Macroeconomics, 41, 21-41.
- Pescatori, A., Sandri, D., & Simon, J. (2014). Debt and Growth: Is There a Magic Threshold? (IMF Working Paper No. 34).
- Reinhart, C., & Rogoff, K. (2010). Growth in a Time of Debt. American Economic Review, 100(2), 573-578.
- Reinhart, C. M., Reinhart, V. R., & Rogoff, K. S. (2012). Public debt overhangs: advanced economies episodes since 1800. Journal of Economic Perspectives, 26(3), 69-86.
- Samargandi, N., Fidrmuc, J., & Ghosh, S. (2013). Is the Relationship between Financial Development and Economic Growth Monotonic? Evidence from a Sample of Middle Income Countries (CESifo Working Paper No. 4743).
- Spilioti, S., & Vamvoukas, G. (2015). The impact of government debt on economic growth: An empirical investigation of the Greek market. The Journal of Economic Asymmetries, 12(1), 34-40.
- Teles, V. K., & Mussolini, С. С. (2014). Public Debt and the Limits of fiscal Policy to Increase Economic Growth. European Economic Review, 66, 1-15.
- Waty, F. (2014). Interdependency between monetary policy instruments and Indonesian economic growth. Journal of Economics and International Finance, 6(9), 203-210.
- The National Bank of Ukraine (NBU). (n. d.)
- The State Statistics Service of Ukraine (SSSU). (n. d.)