Exchange Rate Regime and Disinflation in the Transition : The Experience of the Pre-Announced Crawling Peg in Hungary

The aim of the paper is to analyse the disinflationary process in Hungary which took place in the second half of the 1990s. After the implementation of the so-called "Bokros" austerity package in early 1995, a crawling peg exchange rate regime has been adopted by the Hungarian authorities. We try to shed light on the role this exchange rate system played in disinflation. We also study the credibility of the system and investigate the presence of the Balassa-Samuelson effect. Finally, the Central bank's interventions on the forex market are studied