IDEAS home Printed from https://ideas.repec.org/a/pfq/journl/v56y2011i3p291-302.html
   My bibliography  Save this article

Credibility and Flexibility – Changes in the Framework of Hungarian Public Finances

Author

Listed:
  • Domokos, László

Abstract

This paper presents the three most important institutional steps that Hungary took in 2010 and 2011 to promote the responsible management of public funds. It provides a detailed analysis of the strict provisions of the new Constitution regarding public finances, the strengthened mandates of the Fiscal Council and the renewed audit instruments of the State Audit Office of Hungary. The transformation of the institutional system and the regulatory environment was necessary because the significant increase in debt indicated that the earlier, more permissive regulation failed to attain its target. Experience confirmed that without strict rules and reinforced institutions it is not possible to regain the credibility of fiscal policy and to ensure the economical and responsible financial management of the public sector. The paper explains that Hungary’s new fiscal rules represent an unprece-dented fiscal commitment even at international level, and that the constitutional powers of the Fiscal Council and the resulting rigour are unique in the world.

Suggested Citation

  • Domokos, László, 2011. "Credibility and Flexibility – Changes in the Framework of Hungarian Public Finances," Public Finance Quarterly, Corvinus University of Budapest, vol. 56(3), pages 291-302.
    • Handle: RePEc:pfq:journl:v:56:y:2011:i:3:p:291-302
    as

    Download full text from publisher

    File URL: https://unipub.lib.uni-corvinus.hu/9014/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Lars Calmfors & Simon Wren-Lewis, 2011. "What should fiscal councils do? [Fiscal policy when monetary policy is tied to the mast]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 26(68), pages 649-695.
    2. Domokos, László, 2010. "Lack of transparency hindering foresight in the planning and execution of the budget," Public Finance Quarterly, Corvinus University of Budapest, vol. 55(4), pages 739-745.
    3. Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "A Decade of Debt," Central Banking, Analysis, and Economic Policies Book Series, in: Miguel Fuentes D. & Claudio E. Raddatz & Carmen M. Reinhart (ed.),Capital Mobility and Monetary Policy, edition 1, volume 18, chapter 4, pages 97-135, Central Bank of Chile.
    4. Wyplosz, Charles, 2005. "Fiscal Policy: Institutions versus Rules," National Institute Economic Review, National Institute of Economic and Social Research, vol. 191, pages 64-78, January.
    5. Simon Wren-Lewis, 2011. "Comparing the delegation of monetary and fiscal policy," Economics Series Working Papers 540, University of Oxford, Department of Economics.
    6. Kopits, György & Romhányi, Balázs, 2010. "A Költségvetési Tanács indulásának tanulságai [Hungarys Fiscal Council: Early lessons]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 573-590.
    7. Lars Calmfors, 2011. "The Role of Independent Fiscal Policy Institutions," CESifo Working Paper Series 3367, CESifo.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kerényi, Ádám, 2012. "Need for rethinking of the Hungarian fiscal and monetary policy," MPRA Paper 40352, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Comăniciu Carmen, 2017. "The Fiscal Councils – Independent Fiscal Institutions for Ensuring Fiscal Discipline," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 531-536, December.
    2. Marcela De Castro-Valderrama, 2021. "Present-biased Government, Creative Accounting and a Pitfall in Balanced Budget Rules," Borradores de Economia 1183, Banco de la Republica de Colombia.
    3. Christopher Allsopp & David Vines, 2015. "Monetary and fiscal policy in the Great Moderation and the Great Recession," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 31(2), pages 134-167.
    4. Adam Geršl & Martina Jašová & Jan Zápal, 2014. "Fiscal Councils and Economic Volatility," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 64(3), pages 190-212, June.
    5. Dolls, Mathias & Peichl, Andreas & Zimmermann, Klaus F., 2011. "Eine Herausforderung für die G20: Global vereinbarte Schuldenbremsen und transnationale fiskalpolitische Aufsichtsgremien," IZA Standpunkte 45, Institute of Labor Economics (IZA).
    6. Douglas Sutherland & Peter Hoeller & Rossana Merola, 2012. "Fiscal Consolidation: Part 1. How Much is Needed and How to Reduce Debt to a Prudent Level?," OECD Economics Department Working Papers 932, OECD Publishing.
    7. Miguel Ángel Asencio & Alejandro Asencio & Liliana Peralta, 2013. "Órganos institucionales, presupuestos y regulación fiscal a nivel multigubernamental," Revista Actualidad Económica, Universidad Nacional de Córdoba, Facultad de Ciencias Económicas, Instituto de Economía y Finanzas, vol. 23(81), pages 5-9, Sept-Dic.
    8. Tóth G., Csaba, 2017. "A nemzeti költségvetési szabályok elterjedése és hatása Európában [The spread of national fiscal rules and their effect in Europe]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1119-1147.
    9. Thomas Brändle & Marc Elsener, 2024. "Do fiscal rules matter? A survey of recent evidence," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 160(1), pages 1-38, December.
    10. Charles Wyplosz, 2012. "Fiscal Rules: Theoretical Issues and Historical Experiences," NBER Chapters, in: Fiscal Policy after the Financial Crisis, pages 495-525, National Bureau of Economic Research, Inc.
    11. Mark Schelker, 2016. "Unabhängige Finanzkontrolle in der Demokratie," CREMA Working Paper Series 2016-06, Center for Research in Economics, Management and the Arts (CREMA).
    12. Lars Calmfors & Giancarlo Corsetti & John Hassler & Gilles Saint-Paul & Hans-Werner Sinn & Jan-Egbert Sturm & Ákos Valentinyi & Xavier Vives, 2012. "Chapter 5: The Hungarian Crisis," EEAG Report on the European Economy, CESifo, vol. 0, pages 115-130, February.
    13. Brändle, Thomas & Elsener, Marc, 2023. "Do fiscal rules matter? A survey on recent evidence," Working papers 2023/07, Faculty of Business and Economics - University of Basel.
    14. Étienne Farvaque & Martial Foucault & Marcelin Joanis, 2015. "L’endettement public des provinces canadiennes : Les règles d’équilibre budgétaire sont-elles efficaces?," CIRANO Working Papers 2015s-10, CIRANO.
    15. Patrícia Martins & Leonida Correia, 2021. "Fiscal institutions: different classifications and their effectiveness," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 11(1), pages 159-190, March.
    16. Lars Calmfors, 2012. "The Swedish Fiscal Policy Council: Watchdog with a Broad Remit," CESifo Working Paper Series 3725, CESifo.
    17. Mihaela Onofrei & Tudorel Toader & Anca Florentina Vatamanu & Florin Oprea, 2021. "Impact of Governments’ Fiscal Behaviors on Public Finance Sustainability: A Comparative Study," Sustainability, MDPI, vol. 13(7), pages 1-16, March.
    18. Mr. Xavier Debrun, 2011. "Democratic Accountability, Deficit Bias, and Independent Fiscal Agencies," IMF Working Papers 2011/173, International Monetary Fund.
    19. Agnes Benassy-Quere, 2016. "Euro-Area Fiscal Stance: From Theory to Practical Implementation," CESifo Working Paper Series 6040, CESifo.
    20. Catherine Mathieu & Henri Sterdyniak, 2012. "Faut-il des règles de politique budgétaire ?," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(7), pages 299-346.

    More about this item

    Keywords

    budget; fiscal policy; public finances; fiscal council; budgetary institutions;
    All these keywords.

    JEL classification:

    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pfq:journl:v:56:y:2011:i:3:p:291-302. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Adam Hoffmann (email available below). General contact details of provider: https://edirc.repec.org/data/bkeeehu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.