The Forecasting Capacity of Indicators Measuring Budget Sustainability

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Winners and Losers: An Assessment of the Hungarian Flat Tax Reform with Microsimulation

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Boosting demand by the state and automatic stabilizers

Since the global economic crisis broke out in 2007-2008, the theory of boosting demand by the state has again come to the focus of attention. Besides deploying the monetary tools, the individual governments and international organizations announce one after the other, sometimes even outbidding each other, what amounts from their respective budgets they plan to assign to the moderation of the economic recession. In many cases, the fiscal stimulation of demand is looked upon as a messiah, they talk about it as a magic weapon that helps everybody who has the chance to use it. What is less talked about, however, is the price of the wonder weapon, as well as the conditions required for its effective operation. Besides, the theory of stimulating demand by the state leaves its mark on all the discussions of the crisis to such an extent as if this were the most efficient tool of recovery and the only factor that contributes to becoming indebted for sure. In this study, we primarily strive to examine these phenomena. We are seeking to answer the question whether the boosting of demand by the state is in fact such a wonder weapon, to what extent the time and pace of recovery depend on this. Furthermore, we will try to illustrate, by describing the probable impacts, what weight is represented by the central stimulation of demand within the fiscal policy and to what extent it is responsible for the increase in state debts. In the first part, we will summarize those conditions the existence of which may contribute to the success of boosting demand by the state, by giving an overview of the theoretical literature and the experience gained to date. After the theoretical overview, we will present the result of practical experience and model calculations. Then we will briefly sum up the direct effect of the economic crisis on the national budgets. We will describe and compare in detail the fiscal demand stimulating packages of the economic powers and the EU states, as well as the role of the automatic stabilizers. Besides the estimated impacts and results, we will also show those projections which quantify the long-term costs of boosting demand

Age- and Gender-Specific Excess Mortality during the Covid-19 Pandemic in Hungary in 2020

The excess mortality indicator is able to capture how an epidemic affects a country’s mortality processes, taking into account direct and indirect, as well as possible effects in different directions. From the point of view of mortality processes in Hungary, the main feature of the first months of 2020 was that seasonal flu claimed fewer victims than in previous years, for this reason we examined last year’s excess mortality for the period between weeks 12 and 52 related to the coronavirus epidemic using a stochastic mathematical model. According to our calculations, excess mortality related to the coronavirus epidemic in Hungary was 13,700 people in 2020, which means a 14% excess in the period under review. Eighty-six percent of those who died were over the age of 65, 10 percent were between the ages of 50 and 64, and the proportion of those aged 49 or younger was 4 percent. In almost all age groups, the excess mortality rate was nearly twice as high for men as for women. According to our calculations, excess mortality was roughly one and a half times the number of victims claimed by the epidemic in 2020 according to official statistics, and we also found a significant difference between the time course of the two indicators

Own or inherited? The effect of national fiscal rules after changes of government

In order to get to know more precisely the way national fiscal rules work, in our study we tried to differentiate the signaling function from the limiting one in regard to the operation of the rules. The former occurs when a government introduces fiscal rules to show its commitment to a disciplined fiscal policy, while the latter refers to the fact that rules constitute a true obstacle for budgetary policy. Through an empirical examination on our own database, we considered only the observations when the reigning government responsible for fiscal policy differed from the previous government responsible for its establishment; in this way we measured the effect of the limiting function the rules had. The results of our panel econometric study prove that fiscal rules can contribute to disciplined fiscal policy after a change in government, in times of economic upturn. All this, however, does not mean that the signaling function would be useless; quite the contrary. Our results, in line with the literature, indicate that the double functions of the rule complement one another. The government that introduces the rule is mostly already committed to a disciplined policy, and wishes to signal this in the short term. With the appearance of new governments, however, the rule changes its function and promotes disciplined economic activity efficiently in the long term