THE IMPACT OF THE ASSOCIATION AGREEMENT WITH THE EU ON UKRAINE, GEORGIA, AND MOLDOVA: VAR-MODEL, MONETIZATION INDEX, CUSTOMER PRICE INDEX.
Abstract. This article assesses the impact of the association agreement with the European Union on Georgia, Ukraine, and Moldova. The monetization index is the ratio of the money supply of the M2 aggregate to the GDP of the studied economy. The consumer price index reflects the change in the value of a certain consumer basket. This index is the ratio of the money supply of the M2 aggregate to the GDP of the analyzed economy. The article substantiates the expediency of using such particular indicators due to their monthly update and lower susceptibility to artificial manipulation. For each country, two specific time periods were selected, before and after the entry into force of the association agreement with the European Union. The time intervals were chosen to exclude abnormal events that could affect the accuracy and objectivity of the study. The data obtained were reduced to a general form through econometric transformations. For the selected time intervals, using vector autoregression and the Granger causality test, the dependences of the analyzed indicators of each country on such indicators of the euro area were determined. The
dependence coefficients of the Granger causality test were compared for the time periods before and after the association agreement for each country. Based on the transformed monetization index and consumer price index, conclusions were drawn regarding the change in the degree of mutual influence of the European Union economy on the economies of the countries represented. The conclusions analyze the possible reasons for the data obtained, as well as compare the geographical and economic conditions of each country in the context of the results of the study. The impact of the association agreement with the European Union on the overall economic dependence of Georgia, Ukraine and Moldova on the European Union has been assessed. The countries actively participate in European integration. The study builds an understanding of the depth of integration of each country, as well as analyzes the dynamics of its change in recent periods.
Key words: VAR model, monetization index, M2 aggregate, money supply, Georgia, Moldova, Ukraine, European integration, Customer Price Index, Granger causality test