This paper presents and estimates a dynamic stochastic general equilibrium (DSGE) small-open-economy model for the Hungarian economy. The model features different types of frictions, real and nominal rigidities which are necessary to replicate the empirical persistence of Hungarian data....

We explore the properties of welfare-maximizing monetary policy in a medium-scale DSGE model for Hungary. In order to make our results operational from a policymaker’s perspective, we approximate the optimal policy rule with a set of simple rules reacting only to observable variables. Our...

We examine developments in credit supply in recent years and the significance of its role using different approaches and various methods. Based on these, we can establish that credit supply is a significant factor in terms of the development of the Hungarian economy both during crisis periods...

This paper, using a stochastic dynamic general equilibrium framework, considers how a small open EMU accession country should choose its Euro conversion rate. In this model a monetary union is interpreted as a perfectly credible infinite nominal exchange rate peg, and an algorithm is provided...

This paper studies how the models of the new open economy macroeconomics, which usually focuses on the relationship between the nominal exchange rate and the external real exchange rate, can explain the coexistence of permanent dual inflation, i.e. diverging inflation rates for tradable and...

Using Hungarian macroeconomic and financial data, we estimate a Bayesian structural VAR model suitable for macroprudential simulations. We identify standard macroeconomic and credit supply shocks by sign and zero restrictions. In contrast to the previous literature, different types of credit...

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...

In this study we examine the impact on Hungary of a possible correction of global imbalances. We distinguished four different channels of the global adjustment process, which are widely referred to in the literature (fiscal tightening in the U.S.; housing price correction in the US; an increase...

For several years after 2001, fiscal policy in Hungary was characterised by expansion, boosting the economy through several channels. As a consequence, while the global economy slowed down temporarily between 2001 and 2003, economic growth remained stable at high levels in Hungary. Due to fiscal...