Hungary: Towards a Market Economy

The volume contains a selection of the papers presented at a conference held on 20/21 October 1995 in Budapest. The papers are written by Hungarian authors and have been substantially revised following comments by Western discussants. The volume follows the evolution of the Hungarian economy once the dust of the initial shock which swept Central and Eastern Europe had begun to settle. The first part describes the macroeconomy: the evolution and practice of monetary policy in an environment increasingly dominated by market mechanisms; the link between exchange rate and inflation based on the examination of disaggregated prices; the inability so far of fiscal policy to come to grip with inherited public debt and deficits; and the associated evolution of the underground economy. The second part focuses on the microeconomy. It documents the painful and costly consolidation of the banking sector, presenting an in-depth analysis of the evolution of corporate governance in a highly unsettled environment, and concluding with an analysis of the profitability of export-oriented firms. The final part deals with the labour market. It studies employment policies, the role of the minimum wage as a social compact, as well as labour market discrimination against minorities. It includes a study on health and pension system. This volume offers the most recent assessment of the Hungarian economy. It is wide-ranging yet precise, combining intimate knowledge of the Hungarian economy with the use of up-to-date tools of economic analysis. It will be of interest to all those interested in the process of economic transition: academic researchers, students, policy-makers and analysts.