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THE ROLE OF MONETARY POLICY IN HUNGARY'S HANDLING OF THE FINANCIAL CRISIS (A monetaris politika szerepe Magyarorszagon a penzugyi valsag kezeleseben)

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Nemenyi J.

Kozgazdasagi Szemle (Economic Review)

2009

vol. 56

issue 5

393-421

The international financial crisis caught the Hungarian economy in the midst of a process of budgetary adjustment and prevented a period of two years' restrained growth from giving way to the recovery. Instead, the ever steeper decline in world economic demand pushed the Hungarian economy into recession. The deterioration in performance and prospects was compounded by a domestic political crisis, which increased uncertainty in economic policy. The country's declining credit rating and the drastic fall in available foreign funds after the Lehman collapse in September 2008 led to a flight of foreign investment on the government securities market, which put pressure on the exchange rate and called for rapid adjustment by financial institutions. The level of indebtedness caused volatility that narrowed the room for budgetary and monetary policies in managing the crisis. The article surveys the factors of external and internal origin that brought on a situation marked by shortage of funds, excessive indebtedness and a high proportion of foreign-exchange denominated liabilities. It examines how events in the new, post-Lehman stage in the world crisis have affected the frames and strategy of Hungarian monetary policy and its room for manoeuvre.

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1 Kozgazdasagi Szemle (Economic Review)

1 Nemenyi J.

1 2009

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THE ROLE OF MONETARY POLICY IN HUNGARY'S HANDLING OF THE FINANCIAL CRISIS (A monetaris politika szerepe Magyarorszagon a penzugyi valsag kezeleseben)