Empirical features of the dominance of non-monetary factors in inflationary processes in Ukraine

Sheludko Sergii
Ph.D. in Economics, Associate Professor of the Department of Banking, Odesa National Economic University, Odesa, Ukraine e-mail: : s.szeludko@gmail.com, ORCID ID: http://orcid.org/0000-0003-0636-4940

Babkov Mykyta
Student of the Faculty of Finance and Banking, Odesa National Economic University, Odesa, Ukraine e-mail: : nikitababkov@ukr.net, ORCID ID: http://orcid.org/0000-0002-5053-8840

Cite this article:

Sheludko S., Babkov M. Empirical features of the dominance of non-monetary factors in inflationary processes in Ukraine. Scientific Bulletin of the Odessa National Economic University. 2021. № 7-8 (284-285). pp. 62-68.

Abstract

The aim of the paper is to substantiate the empirical features of the dominance of non-monetary factors in inflation in Ukraine. Applied research prevention made conditions for the use of several econometric methods: OLS-modeling, ARIMAmodeling. It is concidered the key monetary and non-monetary factors of inflation, which are: unreasonable monetary issue; high exchange rate volatility; passive balance of public finances; growth of production costs; growth of aggregate demand not related to the increase in money supply; structural shifts in aggregate demand towards goods with atypical pricing; monopolization of markets for goods and services. It is conducted the review thorough studies of the Phillips curve and its variants adequacy on actual macroeconomic activity in developed countries. It is analyzed the key assumptions on which the curve is based. In addition, an alternative indicator of supply shock was proposed – the ratio of the average nominal wage to the minimal wage, as imbalances in public finances also affect price fluctuations. For the results of the evaluation of the wing Phillips on the data of Ukraine it is found the low adequacy of the obtained models. The construction of an empirically oriented ARIMA model of inflation in 2007-2020 allowed stating that it affects objective monetary factors without soundness, and owning retrospective values of price dynamics are able to fairly accurately reflect future changes. The practical significance of the obtained results depends on the need to consider the identified trends in the formulation and implementation of NBU on monetary policy. The feasibility of using the Phillips curve in large-scale structural models, therefore, raises some doubts, as it potentially distorts the results of macroeconomic forecasting and the monetary policy strategy based on it.

Keywords

ARIMA, inflation, inflation expectations, monetary policy, Phillips curve.

JEL classification: E310, E370 DOI: 10.32680/2409-9260-2021-7-8-284-285-62-68

УДК: 336.748.12

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