Modeling of capital investments public financing volume using logistic curves

EasyChair Preprint 2656

Abstract

A methodological justification of the threshold value of the public financing of capital investments as a point of reverse is provided within the current research (LPI). The point of reverse means a share of public expenditures in the structure of GDP, which excess will slow down economic growth. The authors propose the solution of the scientific problem that considers a point of reverse calculation for the Ukrainian financial system. The LPI threshold method is based on the construction of mathematical functions used to model and predict S-shaped processes, namely: the modified exponent, the Pearl and Reid logistic curve and the Gompertz function. According to the empirical studies’ results in Ukraine, the modified exponent is showing the most adequate results in the verification of the criteria fulfillment (Adjusted Multiple Determination Ratio, Akaike’s Information Criterion, Bayesian Information Criterion). The upper threshold of public capital expenditures in Ukraine (LPI) is 7% of GDP, while the national economy growth in the form of GDP growth will not be possible in case of public capital investments reduction to 0.86%. The analysis shows that the amount of capital expenditures from the state budget is an indicator of the national financial policy that facilitates the extention of economic agreements or their restriction due to the multiplier effect. Thereby, public investment should have limited and mobile measure. At the same time, they should not be a substitute for all existing sources of investment activity financing.

Keyphrases: Gompertz function, Perl and Reid logistic curve, capital investment, economic growth, economic reverse, financial policy, financial resources, modified exponent, public expenditure, public finances, public investment

@booklet{EasyChair:2656,
  author    = {Vitalii Kuzmenko and Svitlana Urvantseva and Serhii Khodakevych and Volodymyr Romanyshyn},
  title     = {Modeling of capital investments public financing volume using logistic curves},
  howpublished = {EasyChair Preprint 2656},
  year      = {EasyChair, 2020}}