European Cooperation (Jul 2015)
REVENUE AS A FACTOR OF BALANCE CURRENT ACCOUNT IN UKRAINE
Abstract
The research opens with the theoretical discourse on connection between budget tax revenue and the current account balance, followed by results of relevant empirical study on quarterly figures of Ukrainian economy through 2000 – 2015 years and the author's conclusion. Among other factors the research analyzes theoretical arguments on “double deficit” of both budget and current account, and the role of open economy as a factor of recovery of capital inflows and of increase in income (GDP) due to changes in relative prices.Based on the structural regression model, the macroeconomic effects of budget revenues on the current account balance and external public borrowings are estimated. It is found that non-standard reverse relationship between budget revenues and the current account balance could be explained by the resulting increase in investments. Either improvement in the current account balance or accumulation of external public debt do not result in the higher tax and other budget revenues. A similar ‘comforting’ effect on the budget revenues is brought about by the improvement in the terms-of-trade.
