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There and Back Again - Six Fiscal Tales from the Past Decades

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  • Gabor P. Kiss

    (Magyar Nemzeti Bank)

Abstract

A phenomenon known in the international literature that is nevertheless unaddressed is that the standard indicators used for analysing fiscal policy can yield misleading results. Creative accounting can distort basic statistics, dividing data into groups of "revenue" and "expenditure" leads to the same distorted results, and the common indicators of the cyclically adjusted balance are also misleading. Based on the indicators adjusted for the impact of these distortions, six fiscal episodes are defined in Hungary between 1995 and 2016. The first episode is the adjustment in 1995-1996. The structure of spending changed then between 1997 and 2001. In 2002-2006, consolidation was delayed after a sudden, major round of fiscal expansion. After this, several approaches were tried to ensure consolidation, in two steps, between 2007 and 2009 and then between 2010 and 2012. Finally, between 2013 and 2016 the structure of spending was changed once again.

Suggested Citation

  • Gabor P. Kiss, 2022. "There and Back Again - Six Fiscal Tales from the Past Decades," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 21(3), pages 73-100.
    • Handle: RePEc:mnb:finrev:v:21:y:2022:i:3:p:73-100
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    References listed on IDEAS

    as
    1. Jacopo Cimadomo, 2012. "Fiscal Policy in Real Time," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(2), pages 440-465, June.
    2. Judit Krekó & Gábor P. Kiss, 2008. "Tax evasion and tax changes in Hungary," MNB Bulletin (discontinued), Magyar Nemzeti Bank (Central Bank of Hungary), vol. 3(1), pages 24-34, April.
    3. Gábor P. Kiss, 1998. "The Role of General Government in Hungary," MNB Working Papers 1998/4, Magyar Nemzeti Bank (Central Bank of Hungary).
    4. Mr. Daniel Leigh & Mr. Andrea Pescatori & Mr. Jaime Guajardo, 2011. "Expansionary Austerity New International Evidence," IMF Working Papers 2011/158, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    fiscal expansion; consolidation; cyclical adjustment; creative accounting;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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