investment volume and the unavailability of credit resources, the proposals to return
production to the metropolis are increasingly being heard as one of the options for anti-
crisis maneuver of states, which can reduce unemployment and create new jobs.
Actually, there is a question for the world about the transition to a new model for
building economic relations – the economy of the proposal, which involves
modernization as a basis – production, and its superstructure – the nature of public
relations. And the fiscal policy forms and reflects the type of state economic model.
Regarding the main economic development indicator – the GDP growth rate, there
is no consensus among scientists on the budget expenditures impact on the rate of
economic growth, because each country has its own optimum in the size of public
expenditures. This indicator is affected by many factors, in particular, the structure of
expenditures, the economic development cyclicality, the external markets situation,
and the energy’s cost for Ukraine as well.
Scientists have proven that the multiplier of reduces budget expenditures by 1%
leads to an average GDP drop of 1.7%. According to IMF’s experts calculations, the
GDP rate is declined today within the range of 1.5-2% of GDP. In addition, the
financial resources global redistribution mechanism calls into question the existence of
a direct correlation between GDP growth rates in a particular country and the results
of this growth. Therefore, forecasts are made that the economic development of
countries in the present conditions should take place through fiscal consolidation, at
least during the next 15 years. The growth of world GDP will be achieved by countries
with growing consumption markets. Today in the world there are 20 fast-growing
countries, for which markets must be fought, because now a new global system of
economic growth is being created in the world [1, p.84].
In this regard, J. Stiglitz warns that when the government cuts costs, there is a
slowdown in economic growth, an increase in unemployment and a reduction in
incomes, which leads to a reduction in tax revenues. The state budget eventually gain
nothing or improve slightly. However, there is one way out from this difficult situation.
Concerns about the amount of debt should lead to a change in the structure of public
spending, to costs that bring high economic returns. But borrowing to finance
investments (for example, in technology, infrastructure and education) with a
profitability of 5 or 6% can lead to a reduction in long-term national debt, as growth,
both in the short and long term, will bring more than enough additional tax revenues to
pay interest rates [10, p.373].
The current state expenditures reduction signals to financial market participants
about the increasing of confidence in government actions in the long-term outlook by
reducing the budget deficit, which in turn will contribute to an increase in aggregate
demand in the country. On the other hand, the reduction of expenditure items of lower
political significance, such as budget investments, will have a weaker effect on the
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