DEVELOPMENT OF INSTITUTIONAL FOUNDATIONS FOR INTERACTION BETWEEN FISCAL AND MONETARY POLICIES OF UKRAINE
Keywords:
fiscal policy, monetary policy, inflation, targeting, budget, regulationAbstract
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
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