№ 12/2017

Ekon Ukr. 2017 (12): 13–33

FINANCE. TAXES. CREDIT

УДК 336.2:336.7

JEL:

IEFYMENKO Tetiana¹

¹SESE “Academy of Financial Management”, Research ID : http://www.researcherid.com/rid/https://www.webofscience.com/wos/author/record/HMP-1501-2023
OrcID ID : https://orcid.org/https://orcid.org/0000-0002-9163-3959

DEVELOPMENT OF INSTITUTIONAL FOUNDATIONS FOR INTERACTION BETWEEN FISCAL AND MONETARY POLICIES OF UKRAINE

Interrelations between stable exchange rate of the
national currency and level of interest rates with the degree of predictability of inflation
dynamics and with factors of stimulation of economic activity and employment in the
country are analyzed. It is proved that the choice of a method of applying the fiscal
instruments (including those aimed at maintaining a safe level of public debt and its
servicing costs) is determined by degree of rigidity of consistent policy of an independent
central bank. In particular, in Ukraine, which according to the IMF classification refers
to developing countries with average income level: (i) potential for budget redistribution
is significantly limited; (ii) high share of revenues is generated by sources of regressive
indirect taxes; (iii) budgetary rules for determining the expenses should be improved in
terms of increased level of transparency and accountability.
At the same time, reducing the tax burden and improving the administration of
mandatory payments contribute to ensuring the social balance in society, growth of
production, etc. However, such a policy can be successful given the positive expectations
of monetary stability in the country.
According to the experience, budget deficit not covered by current monetization of
the economy has a reverse (negative) impact on predictability of exchange rate and price
fluctuations, and ultimately on total output and unemployment.
In the context of countering the shocks, a need to create and further maintain the
vital activity of institutional space for the management integration of fiscal and monetary
directions of the common economic policy in the short and long term is considered.104
To avoid the asymmetry of information within financial markets, it is justified the
importance to harmonize the national regulatory norms and rules with similar international
ones and also to interact professionally with institutions providing these processes

Keywords:fiscal policy, monetary policy, inflation, targeting, budget, regulation

Article original in Ukrainian (pp. 13 - 33)	Download	Downloads :335
Article original in Russian (pp. 13 - 33)	Download	Downloads :281

The article was received by the Editorial staff on November 2 , 2017

References

1. Sargent T.J., Wallace N. Some unpleasant monetarist arithmetic. Federal Reserve
Bank of Minneapolis. Quarterly Review, 1981. Vol. 5, No. 3, pp. 1–17.
2. Blinder A.S. Issues in the coordination of monetary and fiscal policy. NBER
Working Paper No. 982, 1982.
3. The Inflation Targeting Debate. B.S. Bernanke, M. Woodford (Еds.). Chicago,
University of Chicago Press, 2005.
4. Svensson L.E.O., Woodford М. Implementing Optimal Policy through Inflation
Forecast Targeting, in: The Inflation Targeting Debate. B.S. Bernanke, M.Woodford
(Еds.). Chicago, University of Chicago Press, 2005.
5. Woodford M. The Optimum Quantity of Money, in: Handbook of Monetary
Economics. Vol. 2, 1st Edition. B.M. Friedman, F.H. Hahn (Еds.). North Holland, 1990.
6. Schmitt Grohe S., Uribe M. Optimal fiscal and monetary policy under sticky prices.
Journal of Economic Theory, 2004, Vol. 114, Iss. 2, pp. 198–230.
7. Persson M., Persson T., Svensson L. Time consistency of fiscal and monetary policy:
a solution. NBER Working Paper No. 11088, 2005.
8. Schmitt Grohe S., Uribe M. Optimal fiscal and monetary policy in a medium
scale macroeconomic model. European Central Bank, Working Paper Series, No. 612,
April 2006.
9. Benigno P., Woodford M. Optimal inflation targeting under alternative fiscal
regimes. NBER Working Paper No. 12158, 2006.
10. Beetsma R., Jensen H. Inflation targets and contracts with uncertain central
banker preferences. Journal of Money, Credit, and Banking, 1998, Vol. 30, No. 3, Рart 1,
pp. 384–403.
11. Beetsma R., Bovenberg L. The role of public debt in the game of Double Chicken.
1995, available at: cris.maastrichtuniversity.nl/portal/files/1562830/guid
f24b550f 735e 4581 929e c6634ccd5d6c ASSET1.0.
12. Heyets V.M. 25 rokiv transformatsiinykh zmin. Shcho dali? [25 years of
transformations. What’s next?]. Ekonomika i prognozuvannya – Economy and forecasting,
2016, No. 2, pp. 7–8 [in Ukrainian].
13. Heyets V.M. Ekonomika Ukrainy: klyuchovi problemy i perspektyvy [Ukraine’s
economy: key problems and prospects]. Ekonomika i prognozuvannya – Economy and
forecasting, 2016, No. 1, pp. 7–22 [in Ukrainian].
14. Grytsenko A.A. Ekonomika Ukrainy na shlyakhu do inklyuzyvnoho rozvytku [The
economy of Ukraine on the path to inclusive development]. Ekonomika i prognozuvannya –
Economy and forecasting, 2016, No. 2, pp. 9–23 [in Ukrainian].
15. Instytutsiini Transformatsii Sotsial’no Ekonomichnoi Systemy Ukrainy [Institutional
Transformations of Social and Economic System of Ukraine]. Kyiv, Institute for
Economics and Forecasting of the NAS of Ukraine, 2016 [in Ukrainian].
16. Amosha O., Vyshnevs’kyi V. Do pytannya pro otsinku rivnya podatkiv v Ukraini
[On the question on estimation of the level of taxes in Ukraine]. Ekonomika Ukrainy –
Economy of Ukraine, 2002, No. 8, pp. 11–19 [in Ukrainian].
17. Koval’chuk T.T. SOS – v Ukraini neokolonial’na model’ valyutnoi polityky [SOS – the
neocolonial model of currency policy can be present in Ukraine]. Ekonomika Ukrainy –
Economy of Ukraine, 2014, No. 10, pp. 4–13 [in Ukrainian].
18. Korablin S.O. Model’ vidstayuchoho zrostannya: ekonomichni faktory ta naslidky
dlya Ukrainy [The “lagging growth” model: economic factors and consequences for Ukraine].
Ekonomika i prognozuvannya – Economy and forecasting, 2016, No. 2, pp. 74–85 [in
Ukrainian].
19. Danylyshyn B.M. Monetaryzm i rol’ tsentral’nykh bankiv: vid zahal’nosvitovykh
teorii do upravlins’koi praktyky [Monetarism and role of central banks: from global theories
to managerial practice], available at: dt.ua/macrolevel/monetarizm i rol
centralnih bankiv vid zagalnosvitovih teoriy do ukrayinskoyi praktiki _.html [in
Ukrainian].
20. Lunina I.O. Opodatkuvannya bahatstva: mizhnarodnyi dosvid ta uroky dlya Ukrainy
[Taxation of wealth: international experience and lessons for Ukraine]. Finansy Ukrainy –
Finance of Ukraine, 2013, No. 2, pp. 21–31 [in Ukrainian].
21. Wren Lewis S. Comparing the delegation of monetary and fiscal policy.
Department of Economics, University of Oxford, Discussion Paper Series, Nо. 540, 2011.
22. Davig T., Leeper E.M. Monetary fiscal policy interactions and fiscal stimulus.
NBER Working Paper Nо. 15133, 2009.
23. Dixit A., Lambertini L. Interactions of commitment and discretion in monetary
and fiscal policies. American Economic Review, 2003, Vol. 93, Nо. 5, pp. 1522–1542.
24. Persson T., Tabellini G. Macroeconomic Policy, Credibility and Politics. Vol. 1:
Fundamentals of Pure and Applied Economics. Taylor & Francis, 2002.
25. Dornbusch R., Draghi M. Public Debt Management: Theory and History.
Cambridge University Press, 1 edition, 2008.
26. Sehovic D. General aspects of monetary and fiscal policy coordination. Journal
of Central Banking Theory and Practice, 2013, Nо. 3, pp. 5–27.
27. Iefymenko T.I. Fiskal’nyi prostir i stabilizatsiya derzhavnykh finansiv [Fiscal space
and stabilization of public finance]. Finansy Ukrainy – Finance of Ukraine, 2017, No. 9,
pp. 7–28 [in Ukrainian].
28. Svensson L.E.O. What is wrong with Taylor rules? Using judgment in monetary
policy through targeting rules. Journal of Economic Literature, 2003, Vol. 41, Nо. 2,
pp. 426–477.
29. Svensson L.E.O., Williams N. Optimal monetary policy under uncertainty: a
Markov jump linear quadratic approach. Federal Reserve Bank of St. Louis Review, 2008,
Vol. 90, Nо. 4, pp. 275–293.
30. Barro R.J., Gordon D.B. Rules, discretion and reputation in a model of monetary
policy. Journal of Monetary Economics, 1983, Nо. 12, pp. 101–121.
31. Aoki K., Nikolov K. Rule based monetary policy under central bank learning.
CEPR Discussion Paper No. 5056, 2005.
32. Buti M., Roeger W., In’t Veld J. Stabilizing output and inflation: policy conflicts
and co operation under a stability pact. Journal of Common Market Studies, 2001, Vol. 39,
Iss. 5, pp. 801–828.
33. Abdel Haleim S.M. Coordination of monetary and fiscal policies: the case of
Egypt. An Online International Research Journal, 2016, Vol. 2, Iss. 4, pp. 933–954.
34. Scheffler R.M. World Scientific Handbook of Global Health Economics and
Public Policy. Vol. 1: The Economics of Health and Health Systems. World Scientific
Publishing Co. Pte. Ltd., 2016.