The Accumulation of the Foreign Debt of Ukraine: Hope for Economy Growth, or Decline (Empirical Aspects)

Abstract

The article is concerned with influence of the external public debt of Ukraine on the country’s basic macroeconomic indicators. An analysis was carried out using the impulse response of the specified indicators and the external public debt on the basis of building the vector autoregressive models (VAR). A comparison of the results obtained with the results of the computer simulations of the dynamic stochastic general equilibrium model of effect of the external public debt has been done. It has been determined that a positive shock of the external public debt can affect the growth of public expenditures. It has been proven that the most significant is the interference of the external public debt, volume of foreign investment, and the total consumption expenditures. However, interdependence between the external public debt, inflation and the rate of the national currency is insignificant. This is confirmed by the real trends in the Ukrainian economy in recent years, when both the significant inflation and the devaluation of the national currency in any way do not reduce demand of the State on external borrowings. These results correspond with the findings obtained on the basis of building a dynamical stochastic general equilibrium model.

Keywords

• economic growth
• external public debt
• publicly guaranteed external debt
• vector autoregression model (VAR)
• macroeconomic shocks
• impulse response function