Template-Type: ReDIF-Article 1.0

Author-Name: Barry Eichengreen
Author-Workplace-Name: University of California, National Bureau of Economic Research, Centre for Economic Policy Research
Author-Email: eichengr@berkeley.edu
Author-Person: pei2

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

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.

Classification-JEL: E42, E52, E63, N14
Keywords: central banks, central bank independence, monetary policy, stabilization, Magyar Nemzeti Bank
Pages: 44-53
Volume: 23
Issue: 4
Year: 2024
File-URL: https://hitelintezetiszemle.mnb.hu/sw/static/file/fer-23-4-st2-eichengreen.pdf
File-Format: Application/pdf
Handle: RePEc:mnb:finrev:v:23:y:2024:i:4:p:44-53