Burdensome Legacy – Political and Economic Changes Through the Glasses of a Financial Policy Maker

Botos, Katalin (2015) Burdensome Legacy – Political and Economic Changes Through the Glasses of a Financial Policy Maker. Public Finance Quarterly = Pénzügyi Szemle, 60 (4). pp. 482-491.

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The political and economic changes 25 years ago left a burdensome legacy with an impact still felt today. This legacy includes the huge national debt and the failure to complete a price and wage reform. This study aims to dispel myths about the first government failing to request debt forgiveness and prove that making such a request was not a viable option during the first years of the changes. It shows that there were some initial ideas about implementing a wage and price reform, because wages did not include many cost items commonly integrated into them in a market economy including housing, healthcare and education. Interestingly, the study proves that it would have been possible to carry out a reform in 1990 by increasing wages and reducing contributions at the same time. As this did not happen, Hungarian wage levels remained low compared to those in Western Europe. As a result, the “reform” of large systems was confined to hard-to-implement austerity measures resulting in lower living standards.

Item Type:Article
Uncontrolled Keywords:tax cut, wages and price reform, reforming large systems
JEL classification:E24 - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
E31 - Price Level; Inflation; Deflation
H50 - National Government Expenditures and Related Policies: General
H63 - National Debt; Debt Management; Sovereign Debt
ID Code:8829
Deposited By: Alexa Horváth
Deposited On:18 Sep 2023 07:51
Last Modified:18 Sep 2023 07:51

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