Monetary Stabilisation Policies in Hungary: Constraints and Opportunities
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Whereas the breaking-up of the monobank into a two-tier banking system was primarily aimed at establishing coherent institutional conditions for financial management and intermediation under a hard budget constraint, subsequent reforms were aimed at gradually exposing the Hungarian economy to (international) competition via integration: price and import liberalisation, as well as the reduction of all kinds of subsidies effected a gradual shift of the economy to the new price regime which was governed by the conditions of supply and demand on the world market. Inflation and exchange rate instability therefore became the most obvious and immediate fields of concern for economic reform policy.
KeywordsExchange Rate Interest Rate Monetary Policy Central Bank Real Wage
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