A Short “Second Best” Narrative of the Ukrainian Economy/ Una Breve “Segunda Mejor Opción” de Narrativa de la Economía Ucraniana

Soldatos, Gerasimos T. (2016): A Short “Second Best” Narrative of the Ukrainian Economy/ Una Breve “Segunda Mejor Opción” de Narrativa de la Economía Ucraniana. Published in: Boletín de Estudios Económicos , Vol. 72, No. 221 (September 2017): pp. 361-389.

Abstract

This article maintains that in our second best world, neither corruption nor the informal sector and political instability can be held responsible for the moderate performance of the Ukrainian economy. Corruption in Ukraine appears to act as “grease in the wheels of the economy”, while informal activities add to the welfare of its people. And, no connection of political instability with economic performance may be contemplated conclusively. The cause of the inefficiency of private and public investment is traced to poor public governance. Massive infrastructure investments can become the remedy (i) in the context of public-private partnerships with the collaboration of the subnational governments, and (ii) in financing the projects through domestic monetary expansion, under a macroeconomic policy viewpoint emphasizing the monetary rather than fiscal side of the venture. The proposed monetary expansion can only work only under the proper multiplier, accelerator, and capital accumulation link. Special care should be taken to improve the industrial organization of the inefficient banking sector

Este artículo manifiesta que en nuestro mundo de la segunda mejor opción, no se puede atribuir ni a la corrupción ni al sector informal y a la inestabilidad política el rendimiento limitado de la economía ucraniana. En Ucrania, la corrupción parece funcionar como “lubrificante para las ruedas de la economía”, mientras las actividades incrementan el bienestar de su pueblo. Además, no se puede contemplar de manera definitiva ninguna conexión entre la inestabilidad política y el rendimiento económico. La causa de la ineficencia de las inversiones particulares y públicas resalen a la gobernación pública ineficaz. Las inversiones masivas en infraestructuras pueden constituir un remedio (i) en el ámbito de partenariados entre los sectores públicos y privados con la colaboración del gobierno a nivel sub-nacional y (ii) financiando los proyectos mediante una expansión monetaria interior, desde un punto de vista de política macroeconómica que se enfoque en el aspecto monetario de la inversión más que en el fiscal. La expansión monetaria propuesta puede funcionar únicamente con el enlace correcto entre multiplicadores, aceleradores y la acumulación de capital. Se debe cuidar en particular de mejorar la organización del sector bancario actualmente ineficiente.

• Item Type: MPRA Paper
• Language: English
• Keywords: Ukrainian economy, Second-best theory, Infrastructure investments, Monetary expansion; Economía ucraniana, teoría de la segunda mejor opción, inversiones en infraestructura, expansión monetaria
• Subjects: E - Macroeconomics and Monetary Economics > E0 - General > E03 - Behavioral Macroeconomics; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E26 - Informal Economy ; Underground Economy; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E63 - Comparative or Joint Analysis of Fiscal and Monetary Policy ; Stabilization ; Treasury Policy; H - Public Economics > H1 - Structure and Scope of Government > H11 - Structure, Scope, and Performance of Government; H - Public Economics > H5 - National Government Expenditures and Related Policies > H54 - Infrastructures ; Other Public Investment and Capital Stock; H - Public Economics > H8 - Miscellaneous Issues > H83 - Public Administration ; Public Sector Accounting and Audits; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I31 - General Welfare, Well-Being; J - Labor and Demographic Economics > J0 - General > J01 - Labor Economics: General; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O52 - Europe; P - Economic Systems > P2 - Socialist Systems and Transitional Economies > P20 - General

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