Shadow Investment Activity as a Factor of Macroeconomic Instability

Abstract

This paper summarizes the arguments and counterarguments within the scientific discussion on the issue of countering shadow activities in the context of ensuring macroeconomic stability. The main purpose of the study is to determine the acceptable level of investment transactions with signs of fictitiousness, which corresponds to the balance between the level of shadowing of the national economy and its macroeconomic stability. The relevance of this scientific problem is that the shadow investment activities distort the market mechanism and make it impossible to attract financial resources for expanded reproduction in the country. The research of shadow investment activity in the paper is carried out in the following logical sequence: the dynamics of the level of shadowing of Ukraine’s economy, its macroeconomic stability and volume of investment activity with signs of fictitiousness are analyzed, the forms of functional dependence between the analyzed indicators are determined. national economy and maximizing its macroeconomic stability. Methodological tools of the research methods were linear and nonlinear regression analysis, iterative method of Brown-Robinson, which is the basis for solving the problem of game theory. The study period is 2010-2019. The paper proves the existence of nonlinear functional dependence of the level of investment operations with signs of fictitiousness on the level of shadowing of the national economy and its macroeconomic stability. The study empirically confirms and theoretically proves that the volume of investment activity with signs of fictitiousness at 14.76% of GDP is achieved by increasing macroeconomic stability to 0.840 shares and reducing the shadowing of the national economy to 36.30% of GDP. The results of the study can be useful for the executive branch in the formation of public investment policy aimed at improving the quality of the business environment, reducing administrative burdens, and increasing investment demand from foreign investors. Keywords: macroeconomic stability, shadow economy, shadow investment activity, optimization model, game theory.

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