Fiscal solvency and fiscal limitations under economic crisis and recovery: An empirical approach of Ukraine

  • Received November 8, 2022;
    Accepted March 20, 2023;
    Published March 23, 2023
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/imfi.20(1).2023.24
  • Article Info
    Volume 20 2023, Issue #1, pp. 277-292
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The challenges of crisis phenomena can lead to a radical transformation in the stance of public finance and affect the opportunities for economic development. Since the instruments of fiscal adjustment directly determine the solvency and stability of public finances, in these conditions they require special attention. The purpose of the paper is to investigate and assess the correspondence between fiscal solvency, fiscal limitations, and socioeconomic development of Ukraine in a crisis and recovery policy based on compliance with fiscal rules. Empirical studies have not revealed a strong direct correspondence between fiscal solvency, debt security, and socioeconomic development. But at the same time, the implementation or approaching the implementation of fiscal rules has a positive effect on the level of socio-economic development only in conditions of macroeconomic stability, therefore, in a crisis, it is very important not to tighten fiscal rules too early. However, data from the post-crisis policy of Ukraine (2011, 2015, 2021) indicate that incentive measures were prematurely curtailed.

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    • Figure 1. Real GDP growth in % for Ukraine, Bulgaria, Hungary, Poland, Serbia and Human Development Index (2006–2021)
    • Figure 2. Primary balance in % to GDP for Ukraine, Bulgaria, Hungary, Poland, and Serbia (2006–2021)
    • Figure 3. Public debt in % to GDP for Ukraine, Bulgaria, Hungary, Poland, and Serbia (2006–2021)
    • Figure 4. Fitted values of models, Hypothesis 1 (correlation between budget deficit, public debt and real GDP growth), with standard error intervals
    • Figure 5. Fitted values of models, Hypothesis 1 (correlation between budget deficit, public debt and HDI), with standard error intervals
    • Figure 6. Fitted values of models, Hypothesis 2, with standard error intervals
    • Table A1. Real GDP growth in Ukraine, Bulgaria, Hungary, Poland, and Serbia, 2006–2021, in %
    • Table A2. Human Development Index, Ukraine, Bulgaria, Hungary, Poland, and Serbia, 2006–2021
    • Table A3. General government gross debt, Ukraine, Bulgaria, Hungary, Poland, and Serbia, 2006–2021, in % of GDP
    • Table A4. Primary balance-to-GDP ratio, Ukraine, Bulgaria, Hungary, Poland, and Serbia, 2006–2021, in %
    • Table A5. Government securities yield, Ukraine, Bulgaria, Hungary, Poland, and Serbia, 2006–2021, in %
    • Table A6. Correlation matrix for Hypothesis 1 and Hypothesis 2
    • Table A7. Results of modelling for Hypothesis 1 (correlation between budget deficit, public debt and real GDP growth)
    • Table A8. Results of modelling for Hypothesis 1 (correlation between budget deficit, public debt and HDІ)
    • Table A9. Results of modelling for Hypothesis 2.
    • Table A10. Debt security indicators affecting fiscal solvency in Ukraine, 2006–2021
    • Conceptualization
      Hanna Kotina, Maryna Stepura
    • Formal Analysis
      Hanna Kotina, Maryna Stepura, Anastasiia Kornieva
    • Funding acquisition
      Hanna Kotina, Maryna Stepura, Anastasiia Kornieva, Alla Slavkova
    • Investigation
      Hanna Kotina, Maryna Stepura, Anastasiia Kornieva
    • Methodology
      Hanna Kotina, Maryna Stepura, Alla Slavkova
    • Project administration
      Hanna Kotina, Maryna Stepura
    • Resources
      Hanna Kotina, Maryna Stepura, Anastasiia Kornieva, Alla Slavkova
    • Supervision
      Hanna Kotina, Maryna Stepura
    • Writing – original draft
      Hanna Kotina, Maryna Stepura, Anastasiia Kornieva, Alla Slavkova
    • Writing – review & editing
      Hanna Kotina, Maryna Stepura
    • Data curation
      Anastasiia Kornieva
    • Software
      Anastasiia Kornieva
    • Visualization
      Anastasiia Kornieva
    • Validation
      Alla Slavkova