Macroeconomic development model for the national economy (second extension)

The macroeconomic model presented in this paper describes the complex functioning of national economy and can be used to forecast the effect of various economic policies on development trends. It is an extension of [2,3] and adaptation of [4]. To determine the effect on national economy of state policies related to credits, taxes and interest rate, national economy is considered within the framework of four sectors: Government, Private, Monetary and External. The model is developed based on a system of equations, which describes balances of sector incomes and expenditures and allows to present the whole flow of necessary historical information in a coordinated form. The system is completed by behavioral functions which describe interrelations between main macroeconomic variables, and allows to use it to predict the effect of economic policies. The system of equations is solved for all economic sectors simultaneously. There are several types of variables in the model: exogenous variables, which are defined by the user, endogenous variables, which are calculated with the help of the model, and policy variables, which serve as means for adjustment of the economic policies under consideration. All endogenous variables are calculated in base year prices, in current prices and in prices of the previous year. Some variables are represented only in local currency terms, while some are represented in local currency and in dollar terms. To distinguish them the variable notation c ©1998 by M.Dyakonova , E.Naval, L.Savenko