In this paper we investigate the possible effects of fiscal tightening in Hungary from two perspectives. First, simulations in an estimated neo-Keynesian model are used to characterise the effects of different scenarios for fiscal consolidations. We show that the composition of fiscal shocks is...

Broad theoretical consensus and vast empirical evidence reinforce the view that prudent fiscal policy – also advocated by the fiscal institutions of the eurozone – can support the stable long term growth. After presenting some general principles of the optimal fiscal policy, the paper...

The objective of this study is to present the changes in the general government’s role in the distribution and generation of income and in the functions of the state. The period under study is 1991-1997, with an emphasis on the fiscal adjustment which occurred during the years 1995-1996. In...

Cyclically adjusted budget balance (CAB) is a widely cited and widely used concept in the evaluation of fiscal situations. The key idea behind it involves the identification of potential levels of economic variables. There are two recently used methods: the aggregate approach and the...

Cyclically adjusted budget deficit (CAB) is a widely cited and used concept in the evaluation of fiscal situation. The key idea behind it is to separate temporary and/or non-discretionary effects on budget deficit from the underlying balance and/or effects of discretionary measures of fiscal...

This study defines various fiscal indicators for different analytical purposes, adjusting for the distorting effect of creative accounting. It presents these indicators using the example of Hungary. The study abandons the general view that an identical balance is produced from the two...

The Law on Fiscal Responsibility adopted late 2008 is a new element in Hungarian fiscal policy, although not without precedent. Under the law, the Parliament and the Government limit themselves to prevent high fiscal deficits and a further increase in public indebtedness, experienced in recent...

In this article, the average expenditure of Hungary is compared to that of the other three Visegrád countries. In Hungary, this expenditure is higher by 10 % of GDP, but one-quarter of this is attributable to higher interest expenses, and one-third to revenue factors which simultaneously...

Over the past decade, increasing public debt has become one of the most important problems for the Hungarian economy, significantly constraining the room for manoeuvre for fiscal policy and in some periods even calling into question its sustainability. As a percentage of GDP, gross public debt...

If compliance with a fiscal rule in certain periods requires procyclical fiscal policy, it means that fiscal policy does not mitigate the cyclical fluctuations of the economy, but rather may amplify them, i.e. it is unable to perform its stabilisation function. On the basis of the analysis of...