The Methodological Bases for Developing Ukraine’s Aggregated Macro-Economic Model Based on a System of Simultative Equations

• Main Authors: Lukianenko Iryna G., Nasachenko Mariia Yu.
• Format: Article
• Language: English
• Published: Research Centre of Industrial Problems of Development of NAS of Ukraine 2019-08-01
• Series: Bìznes Inform
• Subjects: system of simultative equations; modeling; scenario analysis; shadow sector; macro-economics
• Online Access: http://www.business-inform.net/export_pdf/business-inform-2019-8_0-pages-98_105.pdf

The objectives of the article are the following: building and evaluating with use of a system of simultative equations of an aggregated macro-economic model of Ukraine’s economy, taking into account the level of shadowing; carrying out a scenario analysis based on the model to define the key instruments of the State-based regulation aimed at reducing the shadow sector and achieving macro-economic stability, taking into consideration possible external and internal destabilizing factors and risks. This approach to modeling allows quantifying the interaction of key macro-economic indicators of the Ukrainian economy, but also applying a wide range of scenario analysis to define efficient instruments of the State-based socio-economic regulation both in the short and long perspectives. In order to demonstrate the practical possibilities of the built macro-model, a forecast of the main macro-economic indicators is calculated under the terms of a baseline scenario and several possible scenarios for further economic development are analyzed (in particular, in the assumption as to further growth in average wages and volumes of cash outside banks), as well as an assessment of the impact of such a change on the level of economic shadowing and employment is carried out, indicating invariance of the tendencies of other macro-economic indicators of the model. Scenario analysis and quantification of the relationships between the model’s variables indicate the sensitivity of employment, level of shadow economy, inflation, exchange rate, interest rate and GDP to changes in the macro-economic environment. Prospect for further research is to expand the developed aggregated macro-model of simultative equations by adding other sectors, in particular fiscal, tax, etc., to more accurately reproduce the functioning of the country’s economy as a whole.