DOI: https://doi.org/10.18371/fcaptp.v1i28.163933

CURRENCY FAILURES AND INFLATION CRISIS: UKRAINIAN SPECIFIC AND RELATIONSHIP ASSESSMENT

M. I. Zveryakov, L. L. Zherdetska

Abstract


The article is devoted to issues of currency and inflation crises quantitative identification. As a result of the evaluation of existing empirical studies, theoretical generalizations regarding the stages and the typology of currency crises have been made. The types of the modern currency crises are Crises with Current Account Problems, Crises of Financial Excesses, Crises of Sovereign Debt Problems, Crises with Fiscal Deficits, Sudden-Stop Crises and Self-fulfilling Crises.

The main episodes of currency crises in Ukraine and their causes have been identified. They are crisis in 1993—1995, crisis in 1998—1999, crisis in 2008 and crisis in 2014—2015. Crisis in 1993—1995 related to the general economic crisis after Ukraine gained independence. Crisis in 1998—1999 had been caused by current account deficit and the negative effect of the Asian financial crisis. Crisis in 2008 happened because of an increase in external debt, a credit boom, a reduction in foreign investment and the negative impact of the global financial crisis. Crisis in 2014—2015 related mainly to external political shocks.

The causality relationship between the dynamics of the exchange rate and inflation based on Granger causality test using has been determined. Indicators of Producer Price Index, Consumer Price Index, and Exchange rate dynamics were used as variables in Granger causality equations. It has been established that in Ukraine the dynamics of the exchange rate leads to an increase in prices (inflation) with a lag in 1 month.

The threshold level of inflation for Ukrainian economy has been determined. In case of consumer price index exceeding the level of 32%, economic growth is unlikely to be possible.

It has been proved that the emergence of currency crises in Ukraine is caused by shock events, and the depth of its consequences is due to the weakness of the national economy. Under such conditions, the anti-crisis policy should be directed at maintaining export-oriented industries, removing structural imbalances in the economy, reducing the level of external debt and innovative development providing.


Keywords


financial crisis; currency crisis; inflation crisis; Granger causality test.

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Copyright (c) 2019 M. I. Zveryakov, L. L. Zherdetska

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ISSN (print) 2306-4994, ISSN (on-line) 2310-8770