Articles by : Shvetsʹ Serhiy Mykhailovych№ 2/2012
Economy under the conditions of modern transformations
SHVETSʹ Serhiy Mykhailovych1
1State Institution «Institute for Economics and Forecasting of the NAS of Ukraine»
Assessment of the impact of gross budget expenditures on Ukraine’s rates of economic growth
Ekon. prognozuvannâ 2012; 2:35-46 | |
ABSTRACT ▼
The article presents a chronological retrospective of the public sector in connection with the overall economic development on the example of several countries. The author reveals the reason of the aggravation of the institutional structure misbalance, in particular, the decrease of the real sector’s share in GDP as a result of the negative impact of the government spending in Ukraine in 2005 – 2011. He analyzes the impact of the total value of government spending on the GDP dynamics in Ukraine (by means of econometric and parametric modeling), and determines the critical margin of the government spending (including net credits) beyond which the economic grows stops
Keywords:economic policy, government spending, institutional structure
Article in Ukrainian (pp. 35 - 46) | Download | Downloads :469 |
REFERENCES ▼
1. Landau D. Government Expenditure and Economic Growth: A CrossCountry Study, Southern Economic Journal, 1983, № 49(3), P. 783–792.
2. Kormendi R.,Meguire P., Macroeconomic Determinants of Growth CrossCountry Evidence, Journal of Monetary Economics, 1985, № 16, P. 141–163.
3. Ram R. Government Size and Economic Growth: A New Framework and Some Evidence from CrossSection and TimeSeries Data, The American Economic Review, 1986, № 76(1), P. 191–203.
4. Grier K., Tullock G., An Empirical Analysis of CrossNational Economic Growth: 1951–80, Journal of Monetary Economics, 1989, № 24(2), P. 259–276.
5. Barro R. Economic Growth in a CrossSection of Countries, Quarterly Journal of Economics, 1991, № 106, P. 407–443.
6. Nelson M., Singh R., DeficitGrowth Connection: Some Recent Evidence from Developing Countries, Economic Development and Cultural Change, 1994, № 43(1), P. 167–191.
7. JongWha L. Capital Goods Imports and LongRun Growth, Journal of Development Economics, 1995, № 48(1), P. 91–110.
8. Ghura D. Macro Policies, External Forces, and Economic Growth in SubSaharan Africa, Economic Development and Cultural Change, 1995, № 43(4), P. 759–778.
9. Guseh J. Government Size and Economic Growth in Developing Countries: A PoliticalEconomy Framework, Journal of Macroeconomics, 1997, № 19(1), P. 175–192.
10. Kelly T. Public Expenditures and Growth, Journal of Development Studies, 1997, № 34, P. 60–84.
11. Gwartney J., Lawson R., Holcombe R., The size and functions of government and economic growth, Joint Economic Committee, Washington, D.C, 1998, April, 36 p.
12. Folster S., Henrekson M., Growth Effects of Government Expenditure and Taxation in Rich Countries, European Economic Review, 2001, № 45(8), P. 1501–1520.
13. Burton A. The Effect of Government Size on the Unemployment Rate, Public Choice, 1999, № 99(3–4), P. 395–401.
14. Heyets V. Perspektyvy svitovogo ekonomichnogo zrostannia u 2000–2002 rokakh,Visnyk NBU, 2000, № 2, S. 20–25.
15. Bassanini A., Scarpetta S.,The Driving Forces of Economic Growth: Panel Data Evidence For the OECD Countries, OECD Economic Studies, 2001, № 33(11), P. 9–56.
16. Dar A., AmirKhalkhali S., Government size, factor accumulation, and economic growth: evidence from OECD countries, Journal of Policy Modeling, 2002, № 24, P. 679–692.
17. Saez M., Garcia S., Government Spending and Economic Growth in the European Union Countries: An Empirical Approach, University of Cantabria and University of Oviedo (Department of Economics), 2006, 11 r.
18. Herrera S. Public Expenditure and Growth, Policy Research Working Paper, The World Bank, 2007, № 4372, 66 p.
19. Afonso A., Furceri D., Government Size, Composition, Volatility and Economic Growth, Working Paper Series, European Central Bank, 2008, № 849, 45 p.
20. Mitchell D. The Impact of Government Spending on Economic Growth, The Heritage Foundation, 2005, № 1831(3), 18 p.
21. Barro R. A CrossCountry Study of Growth, Saving and Government, National Saving and Economic Performance, Chicago, The University of Chicago Press, 1991, P. 269–301.
22. Chobanov D., Mladenova A., What is the optimal size of Government, Review Literature And Arts Of The Americas, 2009, August, 47 p.
23. Heyets V.M., Skrypnychenko M.I., Vid ekzogenno zalezhnoi do endogenno oriientovanoi strategii rozvytku ekonomiky, Ekonomika i prognozuvannia, 2003, №1, S. 34–47.
№ 3/2020
DiscussionsSHVETSʹ Serhiy Mykhailovych1
1State Institution «Institute for Economics and Forecasting of the NAS of Ukraine»
Modeling the impact of public debt on economic growth in Ukraine
ABSTRACT ▼
The study considers modeling approaches to determine the relationship between the level of public debt and economic growth. Empirical evidence for the positive, neutral, and negative correlation between the indicators arrive in a nonlinear function in the form of inverted U-curve, whose theoretical argumentation is associated with the implementation of the golden rule of public finance.
To verify the empirical evidence on the example of Ukraine’s economy, the author provides a scenario assessment based on the constructed econometric model of fiscal-monetary interaction. The results of modeling confirm the existence of a relationship that corresponds to a second-order polynomial trend. The maximum level of public debt, above which the GDP rate declines, is 63.8%, and the critical level of public debt, at which the rate of economic growth changes to negative, is 87.4%. As the development of Ukraine’s economy is approaching the upper limit of the determined functional entry, to accelerate growth, it is necessary to focus the limited resource of public debt to finance large-scale infrastructure projects with a high capital return.
Keywords:growth, debt threshold, fiscal-monetary interaction, scenario modeling, econometric macro model
JEL: O41, H63, E63, C32
Article in Ukrainian (pp. 146 - 156) | Download | Downloads :456 |
REFERENCES ▼
1. Wagner, A. (1893). Grundlegung der politischen okonomie [text and handbook of political economy]. Leipzig, Germany: C. F. Winter.
2. Abbas, S. & Christensen, J. (2007). The role of domestic debt markets in economic growth. An empirical investigation for low-income countries and emerging markets. IMF Working Papers, 07/127.
doi.org/10.5089/9781451866919.001
3. Arčabić, V., Tica, J., Lee, J. & Sonora, R. (2018). Public debt and economic growth conundrum: nonlinearity and inter-temporal relationship. Studies in nonlinear dynamics & econometrics, De Gruyter, 22(1), 1-20.
doi.org/10.1515/snde-2016-0086
4. Myers, S. (1977). Determinants of corporate borrowing. Journal of financial economics, 5, 147-175.
doi.org/10.1016/0304-405X(77)90015-0
5. Swamy, Vighneswara (2019). Debt and growth: Decomposing the cause and effect relationship. International journal of finance and economics, 1-16.
doi.org/10.1002/ijfe.1729
6. Jacobs, J., Ogawa, K., Sterken, E. & Tokutsu, I. (2019). Public debt, economic growth and the real interest rate: a panel VAR approach to EU and OECD countries. Applied Economics.
doi.org/10.1080/00036846.2019.1673301
7. Reinhart, C. & Rogoff, K. (2010). Growth in a time of debt. American Economic Review, 100, 573-578.
doi.org/10.1257/aer.100.2.573
8. Checherita-Westphal, C. & Rother, P. (2010). The impact of high and growing government debt on economic growth: an empirical investigation for the euro area. European Central Bank Working Paper Series, 1237.
9. Checherita-Westphal, C., Rother, P. & Hughes Hallett, A. (2012). Fiscal sustainability using growth-maximising debt targets. European Central Bank Working Paper Series, 1472.
10. Greiner, A. (2013). Debt and growth: Is there a non-monotonic relation? Economics Bulletin, AccessEcon, 33(1), 340-347.
11. Liu, Z., Lyu, J. (2020). Public debt and economic growth: threshold effect and its influence factors. Applied Economics Letters, 27(3).
doi.org/10.1080/13504851.2020.1740157
12. Karadam, D. (2018). An investigation of nonlinear effects of debt on growth. The Journal of Economic Asymmetries, 18, e00097.
doi.org/10.1016/j.jeca.2018.e00097
13. Walsh, C. (2010). Monetary theory and policy. The MIT Press.
14. Wray, L. (1953). Modern money theory: a primer on macroeconomics for sovereign monetary. University of Missouri-Kansas City, US.
15. Shvets, S. (2017). Internal public debt and economic growth: the case study of Ukraine. Public and Municipal Finance, 6(4), 23-32.
doi.org/10.21511/pmf.06(4).2017.03