In the past three decades several countries of the world have experienced fast and large real exchange rate appreciation, similarly to the recent Hungarian experience. This paper studies macroeconomic policies and outcomes during and after large real exchange rate appreciations. The two main...

Broad theoretical consensus and vast empirical evidence reinforce the view that prudent fiscal policy – also advocated by the fiscal institutions of the eurozone – can support the stable long term growth. After presenting some general principles of the optimal fiscal policy, the paper...

The most important mechanism through which monetary policy affects the real economy in Hungary is the exchange rate channel. With euro adoption, this mechanism will largely disappear and the impact of monetary policy will be transmitted via the interest rate channel, presently seen as rather...

On 15 and 16 January 2003, an intensive speculative attack was launched against the exchange rate band of the forint. This study analyses the monetary policy decisions with regard to the antecedents of the speculation, the events of the speculative episode and the subsequent period of...

This paper, requested by the Monetary Council, attempts to determine the level of inflation consistent with price stability, taking into account the characteristics of the Hungarian economy. Price stability is defined as the level of inflation that allows the maximisation of social welfare on a...

As part of the monetary transmission studies of the Magyar Nemzeti Bank, this paper attempts to analyse the role of the housing market in the monetary transmission mechanism of Hungary. The housing market can influence monetary transmission through three channels, namely, the nature of the...

In this study we investigate the usefulness of business survey data in forecasting Hungarian manufacturing output growth in the short run. We analyse the individual questions of the business surveys, and use models with different flexibility (factor model, best fitting and recursively best...

The paper examines the inflation forecasting practice and the related institutional framework at the central banks of five Central European countries (the Czech Republic, Hungary, Poland, Slovakia and Slovenia). The first part of the paper presents the general aspects of the comparative...

This paper analyses Hungarian inflation expectations drawn from Reuters survey of professional forecasters. Comparing individual forecasts to macroeconomic consensus leads to the conclusion that - in line with theoretical considerations - averaging single projections results in significant gains...