The thesis studies the theoretical and practical foundations of behavioural economics at the micro, and macro levels. It examines the impact of behavioural factors on economic crises and growth in Ukraine and developed countries and develops tools for macroeconomic modelling based on the actual behaviour of economic agents, from consumers to government agencies. Additionally, it proposes the use of behavioural instruments in public policy for post-war recovery and economic growth.
The study summarises the theoretical foundations of macroeconomics, focusing on key economic indicators such as gross domestic product (GDP) growth, interest rates, and inflation, and their impact on economic agents.
The main stages of macroeconomic modelling development are disclosed, identifying three distinct chronologically consecutive groups: early simple theoretical models, empirical forecasting models, and modern dynamic stochastic general equilibrium models (DSGE models).
The thesis identifies the essential characteristics of behavioural economics, which questions the assumption of rational decision-making by economic agents, emphasising how psychological, sociocultural, and behavioural factors influence their economic decisions.
It is substantiated that at the macroeconomic level, behavioural economics should be studied through agent-based models based on the realistic behaviour of economic agents. These models have shown potential to improve and complement traditional DSGE models by incorporating behavioural factors.
A SWOT analysis of behavioural agent-based models reveals they are promising successors to DSGE models due to their realistic integration of various agents and the application of behavioural economic principles.
The thesis analyses the impact of behavioural biases on the two largest macroeconomic crises of the last 15 years: the Great Recession (the global financial and economic crisis of 2008–2009) and the Great Lockdown (the Covid-19 pandemic of 2020) in the United States, the United Kingdom, Ukraine, and the Eurozone.
In Ukraine, the impact of these global crises was accompanied by unique local features. During the Great Recession, Ukraine's GDP decline was much deeper than in developed countries, amounting to -35 % in US dollars due to significant national currency devaluation, with a peak unemployment rate of 9.6 %, comparable to developed countries. During the Great Lockdown, Ukraine fared better than developed countries due to the return of a significant number of Ukrainian labour migrants at the crisis's onset. As a result, real GDP fell by only 3.7 %, and the peak unemployment rate was 10.9 %, within the European range and much lower than in the United States. Ukraine's crisis response included substantial fiscal interventions but was also marked by systemic risks exacerbated by behavioural biases among banks and borrowers.
Behavioural instruments are increasingly recognised for their potential to influence economic decisions at individual, corporate, and government levels.
The NBU's quarterly projection model (QPM model) has been enhanced to incorporate real agents' behaviours with extrapolative and regressive expectations of private consumption, rather than simple lagged values. These modifications enable the model to respond to various economic shocks to supply and demand appropriately, highlighting the importance of considering consumer expectations when adjusting monetary policy.
The significant impact of the war on Ukraine's economy, including infrastructure loss and population displacement, is assessed. It is recommended to introduce behavioural instruments based on nudge theory, such as tax breaks for young people, potentially bringing $153 to $306 million in annual GDP growth, and an investment tax credit for enterprises, potentially providing $272.8 to $625.9 million in annual GDP growth. Changes to targeted lending to encourage real estate purchases and improvements to the pension system to ensure the financial stability of returning citizens are also proposed.
The proposed behavioural instruments should be integrated into national-level decision-making processes, at the enterprise and corporate level, together with households and consumers to ensure better predictability of activities and mitigate crises' effects.
