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Channels of Monetary Policy in a Transition Country: Hungary

Author

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  • Barran, Fernando

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES); Central Bank of Uruguay)

  • Kegels, Chantal

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

In the last years, Hungary recorded huge current deficits. These results may endanger the capacity of repayment of the outstanding debt and thus its access to international financial markets. We analyze how domestic credit market conditions have affected the current account performance. Implementing Granger-causality tests on time series data over the period 1990-1994, we find that current account performance was negatively affected by credit contraction. Furthermore, using desegregated data on credit, we are able to show that credit to small enterprises is highly significant to explain current account performance as well as the level of unemployment.

Suggested Citation

  • Barran, Fernando & Kegels, Chantal, 1996. "Channels of Monetary Policy in a Transition Country: Hungary," LIDAM Discussion Papers IRES 1996016, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:1996016
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    File URL: http://sites.uclouvain.be/econ/DP/IRES/9616.pdf
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    References listed on IDEAS

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