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Channels of Monetary Policy in a Transition Country: Hungary

  • 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))

Registered author(s):

    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.

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    File URL: http://sites.uclouvain.be/econ/DP/IRES/9616.pdf
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    Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 1996016.

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    Length: 25
    Date of creation: 01 Jun 1996
    Date of revision:
    Handle: RePEc:ctl:louvir:1996016
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    Web page: http://www.uclouvain.be/ires
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    7. Mark Gertler & Simon Gilchrist, 1993. "The role of credit market imperfections in the monetary transmission mechanism: arguments and evidence," Finance and Economics Discussion Series 93-5, Board of Governors of the Federal Reserve System (U.S.).
    8. Benjamin M. Friedman, 1982. "Monetary Policy with a Credit Aggregate Target," NBER Working Papers 0980, National Bureau of Economic Research, Inc.
    9. Ben S. Bernanke & Alan S. Blinder, 1989. "The federal funds rate and the channels of monetary transmission," Working Papers 89-10, Federal Reserve Bank of Philadelphia.
    10. Friedman, Benjamin M & Kuttner, Kenneth N, 1992. "Money, Income, Prices, and Interest Rates," American Economic Review, American Economic Association, vol. 82(3), pages 472-92, June.
    11. Anil K Kashyap & Jeremy C. Stein & David W. Wilcox, 1992. "Monetary Policy and Credit Conditions: Evidence From the Composition of External Finance," NBER Working Papers 4015, National Bureau of Economic Research, Inc.
    12. Hochreiter, Eduard & Rovelli, Riccardo & Winckler, Georg, 1996. "Central banks and seigniorage: A study of three economies in transition," European Economic Review, Elsevier, vol. 40(3-5), pages 629-643, April.
    13. Eduardo Borensztein & Dimitri G. Demekas & Jonathan D. Ostry, 1993. "An Empirical Analysis of the Output Declines in Three Eastern European Countries," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 1-31, March.
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    16. Friedman, Benjamin M., 1983. "Monetary policy with a credit aggregate target," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 18(1), pages 117-147, January.
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    18. Stock, James H. & Watson, Mark W., 1989. "Interpreting the evidence on money-income causality," Journal of Econometrics, Elsevier, vol. 40(1), pages 161-181, January.
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    20. Bernanke, Ben S, 1983. "Nonmonetary Effects of the Financial Crisis in Propagation of the Great Depression," American Economic Review, American Economic Association, vol. 73(3), pages 257-76, June.
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    22. King, Stephen R, 1986. "Monetary Transmission: Through Bank Loans or Bank Liabilities?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 18(3), pages 290-303, August.
    23. Donald P. Morgan, 1992. "Bank loan commitments and the lending view of monetary policy," Research Working Paper 92-09, Federal Reserve Bank of Kansas City.
    24. Kolleen J. Rask & Kevin N. Rask, 1994. "The pivotal role of services in transitional economies: lessons from the West," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(4), pages 467-486, December.
    25. Dariusz K. Rosati, 1994. "Output decline during transition from plan to market: a reconsideration," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(4), pages 419-441, December.
    26. Kornai, Janos, 1993. "The Evolution of Financial Discipline under the Postsocialist System," Kyklos, Wiley Blackwell, vol. 46(3), pages 315-36.
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