“Binary choice”: turning points in Ukraine economy

Abstract

Introduction. Fluctuations of the economic indicators occur under the influence of deterministic and stochastic factors. Stochastic factors include seasonal, cyclical and random components. The experience of long-term influations analyzing proves that in such cases the correlation cloud is not always able to show the direction of the relationship; curves can not reliably explain the trend; random fluctuations can distort the main line system behavior. “Cleaning signal” from stochastic factors is necessary in the design of system behavior line. Solving the problem of “clean” data to identify certain patterns becomes especially important when the researcher has to deal with “jagged” time series, as it is typical for the dynamics of macroeconomic indicators in Ukraine economy for the period 1996-2015 years.

Purpose. Reconstruction behavior parameters and theire influence to identify points in the development of the country that formed the economy turns from positive to negative dynamics. The paper presents an analysis of the monthly data for the period 1996-2015 years: consumer price index (month to month of previous year and month to the previous month), total reserves (million dollars USA), months of import cover, official exchange rate (LCU per USD, period average) and budget balance for the period 2004-2015 years.

Method (methodology). Hodrik-Prescott method is applied to study the behaviour of the system and determing the structural components; correlation method is used to analyze the impact factors; graphical method is applied to visualize the rezults of the analysis. Calculations and graphic design have been made with the use of the application MatLab.

Results. During the period inflation in Ukraine its character has changed from productive to destructive impact. Since 2008 the growth of consumer prices is not a factor that contributes to incomes of the budget. It is  found out that the destructive nature of domestic inflation caused negative impact on the “foreign reserves, months import cover” of the country and abroad. In additional to the growth in consumer prices, the devaluation of currencies (US dolar and national currency) has become a destructive factor too. Today, these factors form the negative economic dynamics of the country.