Assessing the efficiency of the monetary transmission mechanism channels in Ukraine

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The paper is focused on the performance features of the monetary transmission mechanism (MTM) in Ukraine as a small open economy. To assess the efficiency of monetary transmission channels, it is important to disclose their interaction, define criteria and tools for analyzing their impact on key macroeconomic parameters. The study deepens approaches to the analysis of the intensity of using monetary, credit, interest rate and exchange rate channels in Ukraine in 2005–2020 and detects violations in the functioning of the MTM. Using economic and statistical methods and regression models, the influence of the main channels of monetary transmission on real GDP growth rate and inflation in Ukraine was assessed. It was concluded that it is advisable to clarify the conditions for increasing the efficiency of MTM in Ukraine; also, the parameters of forecasting the intensification of its channels in the medium and long term are determined. The paper highlights measures to improve the formation of volume and structure of the monetary base and monetary aggregates, improve credit and investment climate, and increase the efficiency of monetary regulation. Moreover, interest rate and foreign exchange policies of the central bank to transmit impulses from the decisions of monetary authorities to market participants were substantiated.

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    • Figure 1. Volumes and structure of Ukrainian monetary base in 2005–2020
    • Figure 2. The ratio of growth rates of the monetary aggregate M3 and the monetary base in Ukraine in 2005–2020
    • Figure 3. Monetary multiplier, speed of money turnover, and monetization ratio of the Ukrainian economy in 2005–2020
    • Figure 4. Slowdown and instability of monetary transformation processes in Ukraine in 2005–2020
    • Figure 5. Values of indicators characterizing the features of the MTM monetary channel in Ukraine in 2005–2020
    • Figure 6. Indicators of Ukrainian banks’ lending activity in 2005–2020
    • Figure 7. Values of indicators characterizing the features of the MTM credit channel in Ukraine in 2005–2020
    • Figure 8. Values of indicators reflecting the influence of the MTM interest rate channel in Ukraine in 2005–2020
    • Figure 9. Values of indicators characterizing the MTM exchange rate channel in Ukraine in 2005–2020
    • Table 1. Forecast parameters of monetary indicators to improve the efficiency of MTM channels in Ukraine
    • Conceptualization
      Volodymyr Mishchenko
    • Formal Analysis
      Volodymyr Mishchenko
    • Investigation
      Volodymyr Mishchenko, Svitlana Naumenkova, Svitlana Mishchenko
    • Methodology
      Volodymyr Mishchenko, Svitlana Naumenkova, Svitlana Mishchenko
    • Writing – original draft
      Volodymyr Mishchenko
    • Project administration
      Svitlana Naumenkova
    • Supervision
      Svitlana Naumenkova
    • Visualization
      Svitlana Naumenkova, Svitlana Mishchenko
    • Resources
      Svitlana Mishchenko
    • Writing – review & editing
      Svitlana Mishchenko