Abstract
The correlation between macroeconomic dynamics and the inflation rate is the subject of many economic studies. The principles of monetary policy are developed in classical economics studies, which are based on the theories of Keynes, Phillips, Campbell, etc. However, classic approaches require practical validation, especially with regard to modern economic trends in times of crisis and emerging economies. Therefore, the purpose of the paper is to investigate and summarize the impact of inflation targeting and other key monetary policy instruments on fundamental economic indicators in Ukraine during periods of stability and crises. An empirical analysis is based on official statistics from Ukraine for 2011–2019. This study uses econometric methods (multivariate regression and simultaneous equation model), which are applied for the general and transmission impact of inflation on the estimation of economic growth. The results prove that inflation does not affect (less than 0.46 linear correlation) fundamental economic indicators during periods of real GDP growth and a quarterly CPI level of less than 2%. On the other hand, there are significant simultaneous regressions (more than 0.8 coefficients of determination) between unemployed, spending on real final consumption, hryvnia exchange rate and monetary policy instruments (discount rate, international reserves, amount of government bonds, M3 monetary aggregate) for periods when the quarterly CPI (consumer price index) is more than 2%. Therefore, the traditional monetary policy implications are discussed for emerging economies.
Highlights
The global financial crisis of 2008–2009 had a great impact on the advanced and, especially, emerging economies
The development of an inflation targeting mechanism is an urgent perspective in the economy and economic practice
During the crisis, the following factors had a greater effect on real GDP in Ukraine: unemployment, exchange rate, real final consumption expenditure, etc., which have a significant correlation with CPI
Summary
The global financial crisis of 2008–2009 had a great impact on the advanced and, especially, emerging economies. The fundamental principles of economics under the current conditions require revision and confirmation of practical significance This has become very important for emerging economies with monetary policy rules. Sweidan (2004) showed the other impact of inflation on GDP growth in Jordan’s economy He concluded that the correlation between these indicators tends to be positive, but only when the inflation rate does not exceed 2%. The authors proved that the adoption of fully-fledged inflation targeting improved macroeconomic performance and had a positive impact on per capita GDP growth, especially for emerging economies (Chugunov, Pasichnyi, & Nepytaliuk, 2019). The past 20 years were a time of new financial and monetary rules for the world and national economies, especially for emerging economies. It is of particular interest for studying the effects of monetary policy on the financial sector and the economy of Ukraine as an emerging economy
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
