DETERMINANTS OF THE CURRENT ACCOUNT IN UKRAINE: EMPIRICAL PROOFS

The article investigates the influence of factors contributing to the formation of the current account balance in Ukraine by means of constructing the Markov switching model that has demonstrated an accurate representation of the periods of current account surpluses and deficits in Ukraine and an almost exact match of the turning points. The results of the simulation show that during the period of the surplus, the current account balance in Ukraine was influenced by such factors as the index of the real effective exchange rate, gross fixed capital accumulation with lag 1, the growth of the financial development index, and the balance of the current operations account with respect to GDP with lag 1; in the current account deficit periods, by the index of the real effective exchange rate, the trading conditions index, and the balance of current operations against the GDP with lag 1. Empirical calculations proved the sustainability of the surplus and deficit state of the current account balance. This made it possible to estimate the probabilities and an expected duration of stay in each of the state. So, the probability of remaining in the first state is 0.985; in the second state, 0.982; and the probability of transition from the first to the second state is 0.015; from the second to the first state, 0.018. The expected length of the stay in the first state is 67.56 quarters; in the second, 53.92. During the deficit period, it is necessary to note the dominance of the price factors of the current account balance in Ukraine; during the surplus one, the influence of factors confirming the investment activation. The influence of price factors (first of all, the index of the terms of trade) testifies to the dependence of the national economy on the situation on the world markets of traditional domestic exports. In turn, for the period of the current account surplus, the influence of the gross fixed capital formation and the index of financial development on the current account balance in Ukraine is inherent and proves the influence of investment factors on its formation. This may be explained by the expansion of the investment demand (in particular, due to the growth of external demand) and the intensification of capital movements. These factors confirm the adoption of the export model of the economic growth in Ukraine.