Trimming The Sails: The Comparative Political Economy Of Expansionary Fiscal Consolidations : A Hungarian Perspective Project Muse Upcc Books

Fiscal consolidation has significant short term costs which dampen economic growth. This widely shared consensus in literature on political economy makes fiscal adjustment highly unpopular. Benczes conducts a systematic analysis to find out whether it is possible to have fiscal consolidation and experience economic growth even in the short run. The book provides a clear, multidisciplinary and systematic analysis of the relatively new concept of the so-called expansionary fiscal consolidations. This concept suggests that fiscal adjustment can be in trade-off with economic growth if certain conditions are met. But why do only a few countries and only at certain times experience the expansionary effects, while others not at all? The necessary conditions and circumstances have been totally neglected in the literature, or analyzed only partially at best. Having evolved a theoretical framework, it is tested on a difficult case: Hungary, which has had the highest deficit in the European Union. The main question was whether Hungary has a chance to experience short term growth effects in times of adjustment Contents......Page 8 List of Figures......Page 12 List of Tables......Page 14 Acknowledgements......Page 16 1. Introduction......Page 18 1.1 The puzzle: Expansionary fiscal consolidations......Page 19 1.2 Scope of the book......Page 20 1.3 Why a comparative political economy approach?......Page 24 1.4 Sources and data......Page 25 1.5 Structure of the book......Page 26 PART ONE: A Critical Assessment of the Concept of Non-Keynesian Effects......Page 30 2. Stylized Facts of EU Countries’ Major Fiscal Episodes......Page 32 2.1 Identifying exceptional fiscal episodes......Page 34 2.2 Macroeconomic consequences I: Permanent consolidations......Page 39 2.3 Macroeconomic consequences II: Economic growth......Page 42 2.4 Summary......Page 46 3. An Expectational View of Fiscal Policy: A Non-Linear Approach to Fiscal Consolidation......Page 47 3.1 The traditional Keynesian view......Page 48 3.2 The concept of a negative fiscal multiplier......Page 50 3.3 Intertemporal decisions—the modern theory of consumption......Page 73 3.4 Non-Keynesian effects and the criticism of Hall’s stochastic model—the importance of liquidity constraints......Page 76 3.5 Summary......Page 88 4. The Composition of Adjustment and the Structure of Labor Markets: A Linear Approach to Fiscal Consolidation......Page 90 4.1 Linear effects on the supply side......Page 91 4.2 The first step: Composition matters—restoring fiscal balance......Page 96 4.3 The supply-side channel: Non-competitive labor market structures......Page 118 4.4 Summary......Page 132 PART TWO: Testing the Institutional Conditions of Non-Keynesian Effects in Hungary......Page 135 5. Financial Intermediation in Hungary: A Comparative Perspective......Page 137 5.1 An introduction to the study of financial intermediation in Hungary......Page 141 5.2 Transformation and the legacy of the past......Page 142 5.3 Stylized facts of the CEE financial markets......Page 144 5.4 Banking activity in a comparative perspective......Page 146 5.5 Hungary: The deepening of the financial sector......Page 153 5.6 The housing market in Hungary......Page 157 5.7 Vulnerability of the private sector......Page 161 5.8 Summary......Page 163 6. The Expenditure Side of the Hungarian General Government: A Decompositional Analysis......Page 166 6.1 The stabilization process: The years of the Bokros package (1995–1997/8)......Page 167 6.2 After stabilization—before deterioration (1997 and 2000)......Page 175 6.3 Bringing back the past—the revival of fiscal indiscipline (2001–2004/05)......Page 181 6.4 Struggle without hope......Page 199 6.5 Summary......Page 202 7. Labor Market Structure and Wage Bargaining in Hungary: The (Ir)relevance of a Social Pact......Page 206 7.1 The evolution of industrial relations in Hungary: a historical overview......Page 207 7.2 Labor market implications of the enlargement: The three levels of social (non)dialog......Page 211 7.3 About the irrelevance of a Hungarian social pact......Page 218 7.4 Summary......Page 222 8. Conclusion......Page 224 8.1 Non-Keynesian effects at work......Page 227 8.2 The Hungarian relevance of non-Keynesian effects......Page 233 References......Page 242 Appendix 1......Page 256 Appendix 2......Page 259 Appendix 3......Page 261 Appendix 4......Page 263 C......Page 264 E......Page 265 G......Page 266 L......Page 267 P......Page 268 S......Page 269 W......Page 270 Fiscal Consolidation Has Significant Short-term Costs Which Dampen Economic Growth. This Widely Shared Consensus In Literature On Political Economy Makes Fiscal Adjustment Highly Unpopular. Benczes Conducts A Systematic Analysis To Find Out Whether It Is Possible To Have Fiscal Consolidation And Experience Economic Growth Even In The Short Run. The Book Provides A Clear, Multidisciplinary And Systematic Analysis Of The Relatively New Concept Of The So-called Expansionary Fiscal Consolidations. This Concept Suggests That Fiscal Adjustment Should Not Be In Trade-off With Economic Growth If Certain Conditions Are Met. But Why Do Only A Few Countries And Only At Certain Times Experience The Expansionary Effects, While Others Not At All? The Necessary Institutional Conditions And Circumstances Have Been Totally Neglected In The Literature, Or Analyzed Only Partially At Best.--book Jacket. 1. Introduction -- Pt. 1. A Critical Assessment Of The Concept Of Non-keynesian Effects -- 2. Stylized Facts Of Eu Countries' Major Fiscal Episodes -- 3. An Expectational View Of Fiscal Policy: A Non-linear Approach To Fiscal Consolidation -- 4. The Composition Of Adjustment And The Structure Of Labor Markets: A Linear Approach To Fiscal Consolidation -- Pt. 2. Testing The Institutional Conditions Of Non-keynesian Effects In Hungary -- 5. Financial Intermediation In Hungary: A Comparative Perspective -- 6. The Expenditure Side Of The Hungarian General Government: A Decompositional Analysis -- 7. Labor Market Structure And Wage Bargaining In Hungary: The (ir)relevance Of A Social Pact -- 8. Conclusion. István Benczes. Includes Bibliographical References (p. [229]-241) And Index. Provides a multidisciplinary and systematic analysis of the concept of fiscal consolidations. This book discusses the concept, suggesting that fiscal adjustment can be in trade-off with economic growth if certain conditions are met.