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Central Bank Independence and Monetary Stability in Hungary, 1920s and 1990s

Author

Listed:
  • Barry Eichengreen

    (University of California, National Bureau of Economic Research, Centre for Economic Policy Research)

Abstract

This study compares monetary policy and inflation in Hungary in the first half of the 1920s and the first half of the 1990s. In both periods, economic and financial imbalances placed pressure on the central bank to provide inflationary finance. Eventually, in response to the resulting inflation, central bank independence was significantly strengthened. But while central bank independence helped, in neither case did it suffice to prevent subsequent instability. The central bank inevitably felt pressure to accommodate problems emanating from the banking sector, the balance of payments, the government budget and weakened sectors of the economy. The paper concludes by drawing out the implications for current legislation potentially affecting the independence of Hungary's central bank.

Suggested Citation

  • Barry Eichengreen, 2024. "Central Bank Independence and Monetary Stability in Hungary, 1920s and 1990s," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 23(4), pages 44-53.
    • Handle: RePEc:mnb:finrev:v:23:y:2024:i:4:p:44-53
    as

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    File URL: https://hitelintezetiszemle.mnb.hu/sw/static/file/fer-23-4-st2-eichengreen.pdf
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    References listed on IDEAS

    as
    1. Eichengreen, Barry, 1996. "Golden Fetters: The Gold Standard and the Great Depression, 1919-1939," OUP Catalogue, Oxford University Press, number 9780195101133.
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    More about this item

    Keywords

    central banks; central bank independence; monetary policy; stabilization; Magyar Nemzeti Bank;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-

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