Abstract
A new causal simulation model of economic development was created, which comprehensively in detail and fully reflects various types of legal and shadow economic activities and their interrelations.
The model is used to forecast the whole (legal and shadow) country’s economy up to 2022.
The dynamics of shadow and legal indicators are different.
The biggest and most important difference is about exports and imports. Official statistics give a negative balance of the Ukrainian foreign trade of Ukraine in 2019-22. However, total export, determined by the model, considerably exceeds imports, so actually we expect a surplus.
This is very important for the National Bank: its policy based on the official (legal) negative balance of Ukraine foreign trade should be one (throw foreign currency reserves into the market or to devalue the hryvnia), but with the actual balance that includes shadow flows and is positive, - contrary one (to buy currency on the market or to revalue the national currency).
Our model calculates how the production volumes of all types of goods and services should change to ensure that supply and demand are balanced. These numbers can serve a reference for manufacturers.
We suggested that the relevant Ukrainian authorities take an active position in the implementation of the developed forecast for the economic development of Ukraine: measuring actual rates of changes in the production of these types of goods during the year, they provide recommendations to producers to increase or decrease their production.
References
1. Basu, N., Pryor, R., and Quint, T. (1998). ASPEN: A Microsimulation Model of the Economy. Computational Economics, 1998, №12, Issue 3, р. 223-241.
2. Dallago, Bruno. (2003). Small and Medium Enterprises in Central and Eastern Europe - London, Palgrave Macmillan, 295 p.
3. Enste, Dominik, H. (2000). The Shadow Economy and Institutional Change in EU Accession Countries - A Two Pillar Strategy for the Challenges –http://previewer. org/?pdfurl=1qeXpurpn6Wih-SUpOGunKinh8DX24 XH0MbU4eCOucnk29TZ6JbG4sy FueDc4t3a6uHO293X0ZSrzdHg0NOUz-ONqsGPt8jXzdjj29jclJSjm4en4rCWrorLkq3cqKeer4_N4OPmn6OX3 Ofpl9HnyqPPzJvV39HZu9fToNnW5KXe0aKdn6qWqYqg7Q.
4. Frenkel, J., and M. Mussa. (1985). Asset Markets, Exchange Rates and the Balance of Payments. In Handbook of International Economics /R. Jones and P. Kenen (eds).- Vol. I.- Book 3.- Amsterdam: N.Y.; Oxford: North-Holland.
5. Gebauer Stefan and Mazelis Falk (2019). Macroprudential Regulation and Leakage to the Shadow Banking Sector. DIW Berlin Discussion Paper No. 1814, 2019.
6. Giles, D.E.A. (1997). Causality between the measured and underground economies in New Zealand. Appl. Economics Letters. – L., 1997. – Vol. 4, # 1, p. 63-67.
7. Gutmann, P. (1982). The economics of crime: practical methods of evaluation – N.Y. : National Bureau of Economic Research, -1982. – p. 29–37.
8. Houston, Joel F. (2000). Estimating the size and implications of the underground economy. – https://ideas.repec.org/p/fip/fedpwp/87-9.html.
9. Jakub, E.S., Taukchian, E.S. (2010). An open economy model with the shadow sector. Journal of Social and Economic Research: Coll. Science. pr. / Ed. By M.I. Zvyeryakov; Odessa State. Econ. Univ. - Odessa, 2010. - Vol. 38. - p. 197- 203. (Ukrainian).
10. Kichurchak, M. V. (2014). Shadow economy as a factor in the distortion reproduction of public goods in Ukraine. Economy of Ukraine, №6, p. 85-94. (Ukrainian).
11. Lalitha, N. (2000). The unorganized manufacturing sector in the national economy: an analysis of its growth dynamics and contribution to national income - New Delhi: National Council of Applied Economic Research, 2000, 128 p.
12. Lasko, M. (2000). Hidden economy - an unknown quantity? Comparative analysis of hidden economies in transition countries, 1989-1995 - Economics of transition.- Oxford, 2000.-Vol.8, №1.- p.117-145.
13. Loayza, Norman A. (1996) The economics of the informal sector: a simple model and some empirical evidence from Latin America. – http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/1997/02/01/000009265_3970619111006/Rendered/PDF/multi0page.pdf.
14. Solow R.M. (1956). A Contribution to the Theory of Economic Growth. Quarterly Journal of Economics, 70, pp. 65-94.
15. Tanzi, V. (1983). The Underground Economy in the United States: Annual Estimates, 1930–1980 // IMF Staff Papers. – 1983– №30(2). – p. 283–305.
16. Vasylenko, Yu. (2008). Something about the shadow economy - Kyiv: Synopsys (Ukrainian), p. 178.
17. Vasylenko, Yu. (2010). Economics at devaluation and inflation - Kyiv: Synopsys (Ukrainian), p. 142.
18. Vasylenko, Yu. (2014a). Development Model of Ukrainian Economy, Ekonomika. Vilnius. 2014. -Vol. 94(1), p.61-78.
19. Vasylenko, Yu. (2014b). Forecast of the Ukrainian economy development. Herald of the National Bank of Ukraine, 2014, №12, pp. 6-12. (Ukrainian).
