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№ 2014/2

Economy under the conditions of modern transformations


1Institute for Economics and Forecasting, NAS of Ukraine
2Institute for Economics and Forecasting, NAS of Ukraine

Indicators for the identification of dangerous economic imbalances in emerging economies

Ekon. prognozuvannâ 2014; 2:7-20


The article considers the problem of formalizing internal and external factors (indicators) of macroeconomic imbalances, and analyzes their influence on the likelihood of crisis in the emerging economies. The main purpose of the article is to monitor the economic condition and identify and choose the potential predictors of dangerous economic imbalances for the group of countries (Estonia, Latvia, Ukraine, Armenia), that are similar in terms of emergent properties. To identify this group of countries among 57 countries, the authors have used cluster analysis. With the use of the modern mathematical economic methods (panel data model, concept of exchange market pressure, signal approach) the type of binary regression model was chosen (by minimizing noise to signal ratio), and the models where the dependent variable is a binary response, were developed (in particular, probit-model). Those models reflect the dependence of the likelihood of financial crisis on a number of economic indicators.
The authors propose various approaches for detecting the indicators of dangerous economic imbalances. Those approaches provide a modeling tool for the quantitative analysis of macroeconomic policies in terms of the prevention of negative trends in the economic development in Ukraine and other partner countries, which are characterized by similar levels of emerging economies.
The results of the identification and estimation of the levels of economic imbalances in Ukraine (in accordance with the criteria proposed in the article) show the presence of certain imbalances and the economic instability during 2003–2012 (and substantial sectoral imbalances in 2013). The authors have calculated a high (up to the level of 91%) likelihood of a financial crisis in Ukraine for the negative (inertial-risk) scenario.
The results of the investigation may be used by officials, civil servants (those involved in deter-mining this country\'s macroeconomic policies, economic management and forecasting the future economic performance) as a tool for the timely identification of threatening macroeconomic imbalances as a means to detect and prevent a crisis.

Keywords: indicators of dangerous economic imbalances; financial crisis; emerging economies; panel data model; concept of exchange market pressure; signal approach; binary regression model

JEL: C14; C33; E61; P00

Article in English (pp. 7 - 20) DownloadDownloads :287
Article in Ukrainian (pp. 7 - 20) DownloadDownloads :363