Macroeconomic stability evaluation in countries of lower-middle income economies

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Authors:

S.V. Lyeonov, Doctor of Economic Sciences, Professor, Sumy State University, Department of Finance, Banking and Insurance, Professor, Sumy, Ukraine, e-mail: This email address is being protected from spambots. You need JavaScript enabled to view it., orcid.org/0000-0001-5639-3008

T.A. Vasylieva, Doctor of Economic Sciences, Professor, Sumy State University, Educational and Research Institute of Finance, Economy and Management named after Oleg Balatskiy, Director, Sumy, Ukraine, e-mail: This email address is being protected from spambots. You need JavaScript enabled to view it., orcid.org/0000-0001-7889-3521

O.V. Lyulyov, Candidate of Economic Sciences, Associate Professor, Sumy State University, Department of Economics and Business Administration, Associate Professor, Sumy, Ukraine, e-mail: This email address is being protected from spambots. You need JavaScript enabled to view it., orcid.org/0000-0002-4865-7306

Abstract:

Purpose. Developing methods to evaluate macroeconomic stability of countries with lower-middle income economies. The results of analysis will help to make conclusions concerning regulatory economic policy in the given countries to their macroeconomic dynamics level.

Methodology. While investigating macroeconomic stability, the conception of macroeconomic stability pentagon was used which is based on evaluation of five basic macroeconomic indexes: level of GDP growth; unemployment rate; inflation rate; budget balance of the state to GDP; balance of the current turnovers size to GDP. The applied methodic tools are modification of methods, suggested by Professor of Economics Grzegorz W. Kolodko, Dr. Constantin Zaman, and Branko Drcelic. It is completed with the authors’ ideas to consider break of the standard fluctuations, asymmetry and extreme deviations as dynamic indicators of the economic agents’ response to the positive or negative impacts of the macroeconomic destabilization.

Findings. The results of macroeconomic stability pentagons empiric analysis for countries with the lower-middle income economies at different stages of the economic cycle (precrisis period (2000‒2006), crisis period (2007‒2010) and postcrisis period (2011‒2015)) proved the lack of coordination in different economic policies of every studied state. The statistic indicator of the macroeconomic stability is calculated. It is suggested to calculate its dynamic indicator, which differs from statistic one by considering standard fluctuations, asymmetry and extreme deviations of its subindices. It lets to define low syncronization of the analyzed countries’ policies, which have to provide the main five directions of the macroeconomic stability.

Originality. The authors propose to calculate the dynamic indicator together with statistic indicator of the macroeconomic stability, that allows:

- taking into account negative tendencies, which can be leveled owing to stabilization of all other subindices;

- analyzing behavior of the economic agents as a response to positive or negative impacts;

- considering the character of distinguishing subindices of the macroeconomic stability integral indicator.

Practical value. The obtained results will allow evaluating the rate of coordination of separate components of the economic policy in the studied states with the purpose of achieving macroeconomic stabilization. It is a ground to investigate scripts to achieve macroeconomic stability taking into account an optimal rate of the main subindices of macroeconomic stability integral indicator, minimization of the standard fluctuations break, asymmetry of extreme deviations.

References.

1. World Bank, 2017. World Development Indicators 2017, World Bank [online]. Available at: <https://data.worldbank.org/indicator> [Accessed 30 June 2017].

2. WEF, 2017. The Global Comhetitiveness Report 2017‒ 2018, 2009‒2010, 2005‒2006. World Economic Forum, Geneva [online]. Available at: <http//www.weforum.org> [Accessed 27 September 2017].

3. Malina, A. and Mierzwa, D., 2014. The Impact of the Global Crisis on the Macroeconomic Stability of the Countries of Central and Eastern Europe and Germany. In: Malina, A., Oczkowska, R. and Plichta, J., 2014. Knowledge – Economy – Society. Contemporary organizations in the process of institutional transformations. Foundation of the Cracow University of Economics. Kraków, pp. 13‒24.

4. Hurduzeu, G. and Lazăr, M.-I., 2015. An Assessment of Economic Stability under the New European Economic Governance. Journal of Management Dynamics in the Knowledge Economy, 3(2), pp. 301‒315.

5. Żuchowska, D., 2013. Assessment of the Central and Eastern Europe Economies in the Years 2007‒2010 Based on the Model of the Macroeconomic Stabilization Pentagon, Equilibrium. Quarterly Journal of Economics and Economic Policy, 8(4), pp. 49‒64.

6. Pera, J., 2016. Evaluation of the macroeconomic stability of central and eastern European countries with a view toward their membership in the European Union. Multidimensional risk analysis. Journal of Comparative Economic Research, 19(3), pp. 69‒92.

7. Ionita, R.-O., 2015. The evolution of the macroeconomic stabilisation pentagon in Romania, Czech republic and Hungary. Journal of Annals of the University of Oradea: Economic Science, 25(1), pp. 733‒741.

8. Lyulyuv, O. and Shvindina, H., 2017. Stabilization pentagon model: application in the management at macro- and microlevels. Problems and Perspectives in Management, 15(3), pp. 42‒52.

9. Zaman, C. and Drcelic, B., 2009. Macro-stabilisation issues in the Serbian Economy: Methodological Evaluation [online]. Available at: <http://ssrn.com/abstract= 1521660 > [Accessed 1 November 2016].

10. Cariolle, J., 2012. Measuring macroeconomic volatility: applications to export revenue data, 1970-2005. Ferdi, Policy brief B47, March 2012 [online]. Available at: <http://www.ferdi.fr/sites/www.ferdi.fr/files/idi/I14_ eng.pdf> [Accessed 14 February 2017].

11. Vasilyeva, T. A., Leonov, S. V. and Lunyakov, O. V., 2013. Analysis of internal and external imbalances in the financial sector of Ukraine’s economy, Journal of Actual problems of economics, 12, pp. 176‒184.

12. Kolodiziev, O. M. And maksimova, M. V., 2016. Improvement of diagnostic tools of financial controlling of banking operations. Scientific journal, 6/1(23), рр. 25‒33.

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ISSN (print) 2071-2227,
ISSN (online) 2223-2362.
Journal was registered by Ministry of Justice of Ukraine.
Registration number КВ No.17742-6592PR dated April 27, 2011.

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