THE IMPACT OF EXTERNAL PUBLIC DEBT ON THE NATIONAL ECONOMY’S KEY MACROECONOMIC INDICATORS (CASE OF UKRAINE)
Abstract. The paper empirically explores the impact of external public debt in Ukraine on key macroeconomic indicators such as real GDP growth, real effective exchange rate, and current account balance. The problem of increasing external debt affects not only the problems of balance of payments flu...
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| Format: | Article |
| Language: | English |
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FINTECH Alliance LLC
2020-10-01
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| Series: | Фінансово-кредитна діяльність: проблеми теорії та практики |
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| Online Access: | https://fkd.net.ua/index.php/fkd/article/view/2918 |
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| author | V.R. Giedratis A.P. Sofiienko T. Zatonatska O.V. Bazhenova O.V. Dluhopolskyi |
| author_facet | V.R. Giedratis A.P. Sofiienko T. Zatonatska O.V. Bazhenova O.V. Dluhopolskyi |
| author_sort | V.R. Giedratis |
| collection | DOAJ |
| description |
Abstract. The paper empirically explores the impact of external public debt in Ukraine on key macroeconomic indicators such as real GDP growth, real effective exchange rate, and current account balance. The problem of increasing external debt affects not only the problems of balance of payments fluctuations but also economic security and economic growth. We have tested the hypotheses regarding the impact of Ukraine’s external public debt on these indicators in the short and long run. As an empirical tool for hypotheses testing vector autoregression models (VaR models) have been chosen. The results of constructed models show the acceleration of the external public debt growth provokes the GDP growth rate to fall with subsequent macrostabilization. The reaction of the GDP growth rate to the shock of the real effective exchange rate is more noticeable. The shock of real effective exchange rate has led to increase in external public debt with a further dampening to zero.Empirical data from the VaR model confirm that external debt has a negative impact on GDP and essentially behaves similarly to the shock of REER strengthening. Research results confirm the relationship between external public debt, real effective exchange rate, and GDP growth in Ukraine. Based on the models it was analyzed the external public debt and real effective exchange rate shocks influence the real gross domestic product growth rate. The growth of external public debt leads to the GDP growth rate fall by 1% during a year and a half with subsequent stabilization in the future. GDP growth fluctuations are explained mainly by their own fluctuations while external public debt is accounting for 2,5—8% of its fluctuations. Fluctuations in external public debt of 7—10% are explained by current account fluctuations in Ukraine. The described results of the model correspond to the concept of dependent economy.
Keywords: public debt, GDP, balance of payment, fluctuation, exchange rate.
JEL Classification E31, E47, E52, F43, F62
Formulas: 7; fig.: 3; tabl.: 4; bibl.: 46.
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| first_indexed | 2024-03-12T05:38:19Z |
| format | Article |
| id | doaj.art-42634e79d7384dadbbbaef8fd017ee72 |
| institution | Directory Open Access Journal |
| issn | 2306-4994 2310-8770 |
| language | English |
| last_indexed | 2024-03-12T05:38:19Z |
| publishDate | 2020-10-01 |
| publisher | FINTECH Alliance LLC |
| record_format | Article |
| series | Фінансово-кредитна діяльність: проблеми теорії та практики |
| spelling | doaj.art-42634e79d7384dadbbbaef8fd017ee722023-09-03T06:15:25ZengFINTECH Alliance LLCФінансово-кредитна діяльність: проблеми теорії та практики2306-49942310-87702020-10-0133410.18371/fcaptp.v3i34.215512THE IMPACT OF EXTERNAL PUBLIC DEBT ON THE NATIONAL ECONOMY’S KEY MACROECONOMIC INDICATORS (CASE OF UKRAINE)V.R. Giedratis 0A.P. Sofiienko 1T. Zatonatska2O.V. Bazhenova 3O.V. Dluhopolskyi4Vilnius UniversityTaras Shevchenko National University of KyivTaras Shevchenko National University of KyivTaras Shevchenko National University of KyivTernopil National Economic University Abstract. The paper empirically explores the impact of external public debt in Ukraine on key macroeconomic indicators such as real GDP growth, real effective exchange rate, and current account balance. The problem of increasing external debt affects not only the problems of balance of payments fluctuations but also economic security and economic growth. We have tested the hypotheses regarding the impact of Ukraine’s external public debt on these indicators in the short and long run. As an empirical tool for hypotheses testing vector autoregression models (VaR models) have been chosen. The results of constructed models show the acceleration of the external public debt growth provokes the GDP growth rate to fall with subsequent macrostabilization. The reaction of the GDP growth rate to the shock of the real effective exchange rate is more noticeable. The shock of real effective exchange rate has led to increase in external public debt with a further dampening to zero.Empirical data from the VaR model confirm that external debt has a negative impact on GDP and essentially behaves similarly to the shock of REER strengthening. Research results confirm the relationship between external public debt, real effective exchange rate, and GDP growth in Ukraine. Based on the models it was analyzed the external public debt and real effective exchange rate shocks influence the real gross domestic product growth rate. The growth of external public debt leads to the GDP growth rate fall by 1% during a year and a half with subsequent stabilization in the future. GDP growth fluctuations are explained mainly by their own fluctuations while external public debt is accounting for 2,5—8% of its fluctuations. Fluctuations in external public debt of 7—10% are explained by current account fluctuations in Ukraine. The described results of the model correspond to the concept of dependent economy. Keywords: public debt, GDP, balance of payment, fluctuation, exchange rate. JEL Classification E31, E47, E52, F43, F62 Formulas: 7; fig.: 3; tabl.: 4; bibl.: 46. https://fkd.net.ua/index.php/fkd/article/view/2918public debtGDPbalance of paymentfluctuationexchange rate |
| spellingShingle | V.R. Giedratis A.P. Sofiienko T. Zatonatska O.V. Bazhenova O.V. Dluhopolskyi THE IMPACT OF EXTERNAL PUBLIC DEBT ON THE NATIONAL ECONOMY’S KEY MACROECONOMIC INDICATORS (CASE OF UKRAINE) Фінансово-кредитна діяльність: проблеми теорії та практики public debt GDP balance of payment fluctuation exchange rate |
| title | THE IMPACT OF EXTERNAL PUBLIC DEBT ON THE NATIONAL ECONOMY’S KEY MACROECONOMIC INDICATORS (CASE OF UKRAINE) |
| title_full | THE IMPACT OF EXTERNAL PUBLIC DEBT ON THE NATIONAL ECONOMY’S KEY MACROECONOMIC INDICATORS (CASE OF UKRAINE) |
| title_fullStr | THE IMPACT OF EXTERNAL PUBLIC DEBT ON THE NATIONAL ECONOMY’S KEY MACROECONOMIC INDICATORS (CASE OF UKRAINE) |
| title_full_unstemmed | THE IMPACT OF EXTERNAL PUBLIC DEBT ON THE NATIONAL ECONOMY’S KEY MACROECONOMIC INDICATORS (CASE OF UKRAINE) |
| title_short | THE IMPACT OF EXTERNAL PUBLIC DEBT ON THE NATIONAL ECONOMY’S KEY MACROECONOMIC INDICATORS (CASE OF UKRAINE) |
| title_sort | impact of external public debt on the national economy s key macroeconomic indicators case of ukraine |
| topic | public debt GDP balance of payment fluctuation exchange rate |
| url | https://fkd.net.ua/index.php/fkd/article/view/2918 |
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