MONETARY-POLICY AND STABILIZATION IN HUNGARY

Stopping inflation is one of the most important problems of centrally planned economies in transition. In contrast with some other East European countries, there was no hyperinflation in Hungary, but the collapse of CMEA trade and the liberalisation of economic activity were followed by deepening recession and increasing inflation. In this article these problems will be analysed with application to Hungary. First, I outline the state of stabilisation and achievements of monetary policy in Hungary. Then I analyse the tools of monetary policy and its theoretically expected effects. In respect of expected economic events it is very important to make clear whether the monetary policy was in fact restrictive. Finally, I return to analyse savings, fiscal policy and exchange rate policy as factors determining monetary policy's possibilities. The objective of this study is to show that the instruments of monetary policy that have been applied till now are suitable mainly in the short run and are becoming less and less able to influence the money supply processes. -from Author