Myths and Maths: Macroeconomic Effects of Fiscal Adjustments in Hungary
AbstractIn 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 important for both the economic outcome and monetary policy. These simulations suggest a modest output cost of fiscal consolidation. Then we take a closer look at the non-Keynesian effects and their relevance for Hungary in a qualitative way. In our review of non-Keynesian channels of fiscal adjustments we conclude that expansionary effects are likely to become evident only in the medium or long run, rather than immediately after measures are taken.
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Bibliographic InfoPaper provided by Magyar Nemzeti Bank (the central bank of Hungary) in its series MNB Occasional Papers with number 2006/52.
Length: 61 pages
Date of creation: 2006
Date of revision:
Keynesian; non-Keynesian effects; expansionary fiscal adjustment; Monetary policy reactions; Model simulations.;
Find related papers by JEL classification:
- E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
- E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-05-20 (All new papers)
- NEP-CBA-2006-05-20 (Central Banking)
- NEP-EEC-2006-05-20 (European Economics)
- NEP-MAC-2006-05-20 (Macroeconomics)
- NEP-PBE-2006-05-20 (Public Economics)
- NEP-TRA-2006-05-20 (Transition Economics)
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- Borys, Paweł & Ciżkowicz, Piotr & Rzońca, Andrzej, 2011. "Panel data evidence on non-Keynesian efects of fiscal policy in the EU New Member," MPRA Paper 32696, University Library of Munich, Germany.
- Ágnes Orosz, 2013. "Large-Scale Transformation of Socio-Economic Institutions - Comparative Case Studies on CEECs. Background Paper 2: Comparative Country Study - Hungary," WWWforEurope Working Papers series 18, WWWforEurope.
- Mehrotra, Aaron & Crespo Cuaresma, Jesús & Eller, Markus, 2011.
"The Economic transmission of fiscal policy shocks from Western to Eastern Europe,"
BOFIT Discussion Papers
12/2011, Bank of Finland, Institute for Economies in Transition.
- Eller, Markus & Mehrotra, Aaron & Cuaresma, Jesús Crespo, 2011. "The Economic Transmission of Fiscal Policy Shocks from Western to Eastern Europe," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 2.
- Borys, Paweł & Ciżkowicz, Piotr & Rzońca, Andrzej, 2013. "Panel data evidence on effects of fiscal impulses in the EU New Member States," MPRA Paper 48243, University Library of Munich, Germany.
- Gábor P. Kiss, 2007. "Pain or Gain? Short-term Budgetary Effects of Surprise Inflation - the Case of Hungary," MNB Occasional Papers 2007/61, Magyar Nemzeti Bank (the central bank of Hungary).
- Gábor Pellényi, 2012. "The Sectoral Effects of Monetary Policy in Hungary: A Structural Factor Analysis," MNB Working Papers 2012/1, Magyar Nemzeti Bank (the central bank of Hungary).
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