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The impact of fiscal policy in Hungary

Julia Lendvai (Directorate-General for Economic and Financial Affairs)

The impact of fiscal policy in Hungarypdf(105 kB) Choose translations of the previous link 

This Country Focus studies the impact of changes in government expenditure in Hungary over the period 1997Q1 to 2005Q4 using a structural vector-autoregressive model. The results suggest that discretionary shifts in government expenditure have a mixed impact on the economy. In particular, while households are found to respond positively to expansionary government spending leading to an increase in their income, our findings point to a negative reaction on the part of the corporate sector. Overall, increasing government expenditure is found to lead to a contraction in GDP. Private employment is also found to fall back.

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(Country Focus. 11. November 2007. Brussels. 6pp. )

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