System of macromodels in the analytical software tool "Macroeconomic forecasts of Ukraine's economy"

The paper presents a system of macro-models to forecast the economy of Ukraine as a methodological framework for the analytical software tool to support the budget process named "Macroeconomic forecasts of Ukraine's economy" developed at the Institute of Economics and Forecasting of NAS of Ukraine. The system includes integrated forecasting macro-models of Ukraine's economy and a model for sector-by-sector balancing of real and financial flows and is focused on practical implementation in volatile economic conditions. Integrated forecasting models for Ukraine's economy integrate Sectoral models of economic development in accordance with the methodology of construction of econometric models for medium-term estimates of national economic development and search of possibilities of regulation through mechanisms that are laid in the budget, monetary and exchange rate policies with simulation based calculations of this country's medium term based on the scenarios of macroeconomic situation. The models allow taking into account the most essential factors to assess the interplay of relevant factor variables and increase the system's ability to find and regulate development variants with observing the macroeconomic balance. The models of real sector cover various types of macroeconomic imbalances in aggregate demand and aggregate supply, which directly affect the budget deficit, excess money supply, which could lead to inflation, excessive use of foreign exchange reserves, which leads to a balance of payments crisis, high level of foreign borrowing, which leads to debt crisis and significant accumulation of domestic debt, which leads to higher real interest rates and squeezing out of private investments. The model of public sector takes into account the relationship between the indicators of economic dynamics and allows the assessment of the impact, on the one hand, of different variants of fiscal policy on macroeconomic situation in the country as a whole and the state of public finances in particular and, on the other hand, of various options of general economic measures on the public finances. The main components of the model of public sector are total income, total expenses and financing of budget deficit. The model of monetary sector is developed to assess and forecast the key indicators of monetary macro-balance (monetary review). Forecasting the indicators of monetary review includes the following stages: assessment of demand for money; benchmarking for net foreign assets and net domestic credit; and assessment of the money supply. The model of foreign economic sector of Ukraine's economy is based on the methodology of the balance of payments and connects, with balance based relationships, the indicators of current account with the ratio of capital account and financial account. The sector-by-sector model for balancing the real and financial flows is one of the important components of the macroeconomic outlook of Ukraine's economy, as prudence prediction is a fundamental question both in terms of scheduling and elaborating programs of national development. In the context of the elaboration of the analytical software tool "Macroeconomic forecasts of Ukraine's economy", the researchers justified the use of financial programming as a methodological approach to the determination of macroeconomic relationships and evaluation of measures aimed at sustainable use of tools of monetary and fiscal policies, as well as consistent implementation of economic and political development strategies. The analytical software tool "Macroeconomic forecasts of Ukraine's economy" can be used for macroeconomic analysis and scenario based forecasting of medium term (three years) development of Ukraine's economy, in accordance with the concept of the adequacy of the estimates of budget indicators, which are recommended to calculate within the forecast period not exceeding three years. Therefore the appropriate projections for the last year of the forecast period can be done after receiving and processing statistics involved in modeling tool for the last year of the reporting period, and quantitative analysis of forecasting situations for alternative policy scenarios, in accordance with the assumptions of the unit of exogenous regulatory variables, allows developing practical recommendations on the mechanisms for identifying crisis situations and ensuring sustainable medium term development.