№ 10/2017

Fìnansi Ukr. 2017 (10): 86–109

FINANCIAL AND ECONOMIC REGULATION

VASILENKO Yuriy ¹

¹SESE “The Academy of Financial Management”

Determination and application of the fiscal multiplicator in medium-term forecasting

The author identifies the latest trends in the determination and application of the fiscal multiplier in developed countries, drawing attention to two main methods: an empirical assessment (focusing on the advanced G20 countries, with the largest number of studies done for the United States), and model-based approaches, mainly on the model DSGE. The method of determining the fiscal multiplier on the new-Keynesian model of the open economy IS-LM is justified. A model apparatus for estimating the multiplier effect based on the modernized formula of the traditional Keynesian multiplier (using EViews software) and a model apparatus for developing multivariate medium-term forecasts of the multiplier effect of general government spending on Ukraine's economic growth (in Excel) are developed. The value of the fiscal multiplier in Ukraine is determined on the basis of statistical data for 2001-2016. It is equal to 1.5, which is typical for Ukraine in its present recessionary state, when it has just begun to recover after the crisis of 2014-2015. The directions of application of the fiscal multiplier in the analysis and medium-term forecasting are determined. A multivariate medium-term forecast of the multiplier effect of general government spending on Ukraine's economic growth for 2017-2020 is developed. The article provides examples of the application of the fiscal multiplier for analyzing the consequences of various state policies in terms of the reduction of government spending and investment activity of the country's government.

Keywords:fiscal multiplier, model apparatus, multivariate medium-term forecast

JEL: E62, F30, H62

Vasilenko Y. . Determination and application of the fiscal multiplicator in medium-term forecasting / Y. Vasilenko // Фінанси України. - 2017. - № 10. - C. 86-109.

Article original in Ukrainian (pp. 86 - 109)

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