Monetary policy during the wartime: How to ensure macroeconomic stability

Danylyshyn, Bohdan; BOHDAN, Ivan

doi:10.21511/imfi.19(2).2022.30

Cited by 24 publications

(13 citation statements)

References 36 publications

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“…Since the beginning of russia's military aggression and the introduction of martial law in Ukraine, in addition to other losses, losses in the economy have grown catastrophically. As of two quarters and early September, the Ministry of Finance (MinFin, 2022) predicts that the gross domestic product (GDP) of Ukraine may fall by 30-50% due to a full-scale war with the russian federation; in absolute terms, in 2021 prices, this would correspond to UAH 1.6-2.7 trillion ($56-92 billion) of lost production during the year (Danylyshyn, 2022). For comparison, Ukraine's GDP in 2021 was estimated at $200 billion, that is, over the 7 months of the war, the damage exceeded GDP by 3 times, despite the fact that the intensity of destruction and losses is increasing.…”

Section: Resultsmentioning

confidence: 99%

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Financial instruments for ensuring national security: experience of Ukraine in military conditions

Radchenko¹,

Tulush²,

Leontovych³

2023

IRD

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State security is the main guideline of state policy in the face of global challenges. For Ukraine, it is especially relevant, because during the period of the russian-Ukrainian war, its foundations and essence experience significant deformations. Since the risks and threats to national security have increased enormously in Ukraine under martial law, its financial component should be formed according to the tools corresponding to the challenges, even ahead of them, since, according to analysts, modern war is a war of finances. The problems faced by the state, the banking system, financial and commodity markets and institutions, corporations and households need new financial instruments to ensure flexibility in financing strategic goals. As of September, the losses of the Ukrainian economy from the war are estimated according to various estimates, from USD 105 billion, or 70% of the average annual GDP over the past 5 years, to USD 600 billion, and this exceeds the level of GDP in 2021 by 3 times. This actualizes the needs of the scientific study of financial instruments with the aim of effective state regulation and equalization in the face of limited and increasing losses of human and material resources, changes in the direction and speed of financial flows, their sources, structure, reproduction and reservation. The study examines financial instruments of a predominantly budgetary direction, as well as the components of national indicators of financial security. It is also important to analyze the share of the state in the economy, the size of which determines the speed of response and the completeness of resistance due to a threat to national security. To achieve the goals of the study, the main legally established risks of financial instruments of the national economy during the period of martial law are systematized. The indicators of the financial security of the state for the period of hybrid and military aggression of the rf (2013-2021) were assessed, and according to open sources of data, which are rather limited, a forecast of these indicators for 2022 was made. On the basis of the Financial Stability Report of the National Bank of Ukraine, the budget innovations of the period of martial law are analyzed. The sources of financing the state budget for the period of the legal regime of martial law and its main directions for 2023 are summarized. It is concluded that the financial system of Ukraine in a short time managed to organize financial flows in accordance with the needs of ensuring national security, form an optimal balance of resources, maintain the volume of financing of basic budget expenditures, attract donor resources and resist the inevitable decline of the economy during the war. The role of donor countries of economic and military assistance, in particular Latvia, in deterring military aggression and ensuring the stability of Ukraine's financial policy was emphasized.

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Section: Resultsmentioning

confidence: 99%

“…The calculation of the indicator is given in Table 8. Empirical evidence unequivocally proves that countries with a low state share are more vulnerable to extraordinary shocks and sovereign debt crises (Danylyshyn, 2022).…”

Section: Insights Into Regional Developmentmentioning

confidence: 97%

Financial instruments for ensuring national security: experience of Ukraine in military conditions

Radchenko¹,

Tulush²,

Leontovych³

2023

IRD

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“…These are holding back the economy's recovery and worsening enterprises' expectations (Mazaraki & Zubko, 2022). Danylyshyn and Bohdan (2022) justify the model of the monetary regime during martial law. It requires modifying the target orientation of monetary policy, composing interest rates, regulating the foreign exchange market and capital movements, and enhancing the relationship between the central bank and the Ministry of Finance.…”

Section: Literature Reviewmentioning

confidence: 99%

The impact of governance quality on central bank’s independence

Vasilyeva

Dudchenko

Samusevych

et al. 2023

Public and Municipal Finance

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The stable functioning of the public finance system requires a rational regulatory apparatus. The central bank occupies a special place in this system. Science and practice prove that the central bank’s political and economic independence determines its effectiveness. Thus, it is crucial to determine the prerequisites for ensuring its independence. The study aims to assess the influence of governance quality on the central bank’s independence, considering the variance of the socio-political development of countries. The analysis was conducted based on 53 countries. Panel regression modeling with random effects was chosen as a research method. The analysis approach involves calculations for the groups of countries that differ in social and political development parameters according to the following criteria: the initial level of the central bank independence; level of human development; political rights freedom; level of civil liberties; and political regime. Socio-political factors significantly affect the central bank’s independence in the following conditions: a high initial level of independence of the central bank, a high level of human development, and an average level of political and civil freedom. At the same time, the governance quality ensures the growth of the central bank’s independence regardless of the countries’ political regime. Three factors have the most significant influence on ensuring the independence of the central bank, namely “government efficiency,” “quality of regulation,” and “rule of law.”

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“…High risks of external vulnerability of the economy and the increase in government borrowing since the beginning of the 2008 economic crisis have explained the continued high rates of debt securities and high level of budget deficit in Ukraine. In addition, sustainable public finances also require that national fiscal policy be supported by monetary policy, which can control inflation in the medium to long term that reinforces price stability (Danylyshyn & Bohdan, 2022). And it is very important for evaluating the performance of fiscal rules to keep the growth of public expenditure below the growth of inflation (Díaz-Roldán et al, 2021).…”

Section: Literature Reviewmentioning

confidence: 99%

Fiscal solvency and fiscal limitations under economic crisis and recovery: An empirical approach of Ukraine

Kotina

Stepura

Kornieva

et al. 2023

Investment Management and Financial Innovations

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The challenges of crisis phenomena can lead to a radical transformation in the stance of public finance and affect the opportunities for economic development. Since the instruments of fiscal adjustment directly determine the solvency and stability of public finances, in these conditions they require special attention. The purpose of the paper is to investigate and assess the correspondence between fiscal solvency, fiscal limitations, and socioeconomic development of Ukraine in a crisis and recovery policy based on compliance with fiscal rules. Empirical studies have not revealed a strong direct correspondence between fiscal solvency, debt security, and socioeconomic development. But at the same time, the implementation or approaching the implementation of fiscal rules has a positive effect on the level of socio-economic development only in conditions of macroeconomic stability, therefore, in a crisis, it is very important not to tighten fiscal rules too early. However, data from the post-crisis policy of Ukraine (2011, 2015, 2021) indicate that incentive measures were prematurely curtailed.

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Monetary policy during the wartime: How to ensure macroeconomic stability

Cited by 24 publications

References 36 publications

Financial instruments for ensuring national security: experience of Ukraine in military conditions

Financial instruments for ensuring national security: experience of Ukraine in military conditions

The impact of governance quality on central bank’s independence

Fiscal solvency and fiscal limitations under economic crisis and recovery: An empirical approach of Ukraine

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