In open economies excess demand in the tradables sector often manfests itself in an external deficit instead of the employment gap that is applied in the usual Phillips-curve model. The inflationary pressure in this case arises from an expected or actual weakening of the exchange rate and its...

CEE countries experience a catching up period in economic growth while preparing for accession to the European Union. In several countries we experience an expenditure boom arising either from exuberant expectations of consumers towards EU or EM or a fiscal deficit usually underpinned by an...

Income per capita of Hungary attained 70 percent of the Austrian level by the end of the eighteenth century and fluctuated around this value between the World Wars. As an „achievement” of the last 50 years this ratio — measured at purchasing power parity — has decreased to about 40...

The model is an application of the precautionary consumer saving model to the external debt policy of a small open economy. Let us assume that the welfare criterion of macroeconomic policy is the utility function of a representative infinitely living dynasty. This approach is in line with the...

This paper argues that the Phillips curve relationship is not sufficient to trace back the output gap, because the effect of excess demand is not symmetric across tradeable and non-tradeable sectors. In the non-tradeable sector, excess demand creates excess employment and inflation via the...