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The misbalances of aggregate demand in Ukraine's economy

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  • T. Shynkorenko, Т. Makushenko

Abstract

The article presents the results of an investigation on the formation of aggregate demand in Ukraine. The authors prove that, as a result of the inefficient government's policy, in Ukraine, the misbalances of domestic demand are aggravating, being the main disproportion the excessive inclination towards consumption, with a clearly insufficient development of the investment component. The low rate of the generation of fixed capital cannot ensure the financing of an active modernization of Ukraine's economy, especially with regard of the unprecedentedly high level of the physical wear and tear of fixed assets, insufficient development infrastructure and a weak development of many modern Economic activities. Domestic consumer demand is distorted towards the excessively high share of private demand, while the government demand is clearly insufficient to solve the problems of restructuring and sustainable development of Ukraine's economy. Predominant expansion of private demand without a corresponding development of domestic production encourages the expansion of imports leading to the increase in the deficit of the foreign trade balance.

Suggested Citation

  • T. Shynkorenko, Т. Makushenko, 2014. "The misbalances of aggregate demand in Ukraine's economy," Economy and Forecasting, Valeriy Heyets, issue 1, pages 7-24.
  • Handle: RePEc:eip:journl:y:2014:i:1:p:7-24
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    File URL: http://eip.org.ua/docs/EP_14_1_07_uk.pdf
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