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The Hungarian monetary transmission mechanism: an assessment

In: Transmission mechanisms for monetary policy in emerging market economies

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  • Balazs Vonnak

    (Magyar Nemzeti Bank (Central Bank of Hungary))

Abstract

This paper attempts to aggregate and summarise fresh results concerning the monetary transmission mechanism in Hungary. Within a research project at the MNB nine studies have been published investigating the channels through which Hungarian monetary policy affects the economy. We create a framework for synthesising particular results based on Mishkin’s (1996) classification. We analyse how aggregate demand is affected through those channels. Our conclusion is that during the past ten years monetary policy did exert a measurable influence on real activity and prices. The dominance of the exchange rate channel explains why prices respond faster and output responds more mildly than in closed developed economies like the U.S. or the euro area. We expect that after adopting the euro the absence of exchange rate will be compensated by the fact that the interest rate channel will work through foreign demand as well. Therefore, no significant asymmetries can be expected inside the euro area in terms of monetary transmission.
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Suggested Citation

  • Balazs Vonnak, 2008. "The Hungarian monetary transmission mechanism: an assessment," BIS Papers chapters, in: Bank for International Settlements (ed.), Transmission mechanisms for monetary policy in emerging market economies, volume 35, pages 235-257, Bank for International Settlements.
    • Handle: RePEc:bis:bisbpc:35-12
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Pirovano, Mara, 2012. "Monetary policy and stock prices in small open economies: Empirical evidence for the new EU member states," Economic Systems, Elsevier, vol. 36(3), pages 372-390.
    2. Ábel, István & Kóbor, Ádám, 2010. "A monetáris restrikció hatása strukturális VAR keretben [The effect of monetary restriction in a vector auto-regression framework]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 412-430.
    3. Anna Burova & Tatiana Grishina & Natalia Makhankova, 2024. "Measurement of auxiliary indicators of aggregate interest rates on loans to non-financial organisations," Bank of Russia Working Paper Series wps137, Bank of Russia.
    4. Dániel Holló, 2010. "Estimating Price Elasticities on the Hungarian Consumer Lending and Deposit Markets: Demand Effects and Their Possible Consequences," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 73-89.
    5. Baxa, Jaromír & Plašil, Miroslav & Vašíček, Bořek, 2015. "Changes in inflation dynamics under inflation targeting? Evidence from Central European countries," Economic Modelling, Elsevier, vol. 44(C), pages 116-130.
    6. Regős, Gábor, 2013. "Kockázattal kiegészített Taylor-szabályok becslése Magyarországra [Estimation of risk-augmented Taylor rules for Hungary]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 670-702.
    7. Muhammad Arshad Khan & Ather Maqsood Ahmed, 2016. "Conducting Monetary Policy in South Asian Economies: An Investigation," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 55(3), pages 161-190.
    8. Sági, Judit, 2012. "Debt trap - monetary indicators of Hungary's indebtedness," MPRA Paper 40343, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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