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Central Bank Profitability and Budget Deficit

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  • Novák, Zsuzsanna
  • Vámos, Imre

Abstract

This paper investigates central bank profitability primarily focusing on its impact on the government budget. It compares the accounting profit of the four euro area countries running the highest debt and three new EU Member States in the period 1999–2013 following the introduction of the euro. The analysis points out that despite autonomous monetary policy and higher seigniorage revenue, countries with higher levels of (external) government debt, such as Hungary, are often faced with central bank losses. The paper summarises and systematises the main findings of the 2013/I thematic issue of the Public Finance Quarterly titled “Monetary Policy” on the relationship between the National Bank of Hungary (MNB) and the budget. Furthermore, it delineates the European Union’s relevant recognition rules and evaluates the domestic processes in an international context by describing the profitability of the ECB and the selected European central banks.

Suggested Citation

  • Novák, Zsuzsanna & Vámos, Imre, 2014. "Central Bank Profitability and Budget Deficit," Public Finance Quarterly, Corvinus University of Budapest, vol. 59(4), pages 492-510.
    • Handle: RePEc:pfq:journl:v:59:y:2014:i:4:p:492-510
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    File URL: https://unipub.lib.uni-corvinus.hu/8862/
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    References listed on IDEAS

    as
    1. Carl E. Walsh, 2010. "Monetary Theory and Policy, Third Edition," MIT Press Books, The MIT Press, edition 3, volume 1, number 0262013770, December.
    2. Dedák, István, 2013. "Balance Sheet Recession and Debt Financing," Public Finance Quarterly, Corvinus University of Budapest, vol. 58(1), pages 76-94.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    central bank; budget; government debt;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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