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Destined to be defaulted: Local government insolvency and bailout in post-transition Hungary

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  • Izabella Barati-Stec

    (Central European University, Hungary & Budapest Business School, Hungary)

Abstract

This paper reviews the waves of democratization and the development of the public administration and public finances in Hungary, with special attention municipalities caused by the changes in sub-national finance regulation since 2010. During the transition yeas, Hungary was very forward looking and the first among CEE countries to end central planning and to introduce market rules into the economy. Everybody expected the decentralization to be a success story. 25 years later, Hungary not only failed to meet the expectations, but also undergone though a situation in 2008 to start a massive recentralization process. This paper puts fiscal decentralization in Hungary in a historical context while critically investigating the findings of recent literatures on decentralization process in Hungary. The critical investigation of past experiences and reform steps of the current government suggest possible reform measures to solve the financial problems of Hungarian municipalities.

Suggested Citation

  • Izabella Barati-Stec, 2014. "Destined to be defaulted: Local government insolvency and bailout in post-transition Hungary," Journal of Economic and Financial Studies (JEFS), LAR Center Press, vol. 2(6), pages 1-15, December.
    • Handle: RePEc:lrc:lareco:v:2:y:2014:i:6:p:1-15
    DOI: http://dx.doi.org/10.18533/jefs.v2i04.147
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    More about this item

    Keywords

    Local public finance; Local insolvency; Municipal bail-out; Sub-national debt.;
    All these keywords.

    JEL classification:

    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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