How did we get here: Hungarian budget 2000–2006 – A step towards the comprehensive analysis of budgetary interactions

Abstract

Budget is an intricate system. It is quite probable that only few people would immediately comprehend how decreasing the support of pharmaceutical prices could cause the deterioration of the budget balance. Still, that is rather likely to happen, as decreasing supports means increasing the consumer prices of medicines, which causes to increase the pensioner price index, which increases the Swiss index, which increases pension-related expenditures. Similarly, at a first glance, it is far from obvious how large an effect the freezing of public sector wages or the lifting of this freezing might make on of the budget deficit, as the effect of rise of gross wages is largely cushioned by a contrary change in tax and contribution revenues, whereas magnified by the increase of pension-related expenditures, the latter being again cushioned by the effect on the indirect tax revenues to some extent.