Gabor P.Kiss

Fiscal Adjustment in the Transition Process: Hungary, 1990-1999

Two economists of the National Bank of Hungary review fiscal developments during a decade of transition in Hungary. The paper examines the role of fiscal policy in stabilizing the economy in the face of external and reform-induced shocks, the way in which fiscal policy contributed to the reforms, and the manner in which the downsizing of the government was implemented. The authors also analyze the main causes of public debt accumulation and sources of financing. The paper concludes by identifying some lessons to be derived from the Hungarian experience. Journal of Economic Literature, Classification Numbers: H62, P27, P35. 7 figures, 9 tables, 20 references.

How to Measure Tax Burden in an Internationally Comparable Way

In this paper we address the issue of tax burden and its measurement, beginning with a discussion of use of tax-to-GDP ratio for this purpose. We show that this commonly used indicator has a number of flaws, related to the methodology of calculation of taxes and GDP in national accounts. Firstly, tax revenue calculated in accordance with ESA95 methodology is not perfectly in line with the economic concept of taxes, i.e. levies imposed by the government, which are compulsory and unrequited. Secondly, both tax revenue and GDP include a government component, which distorts the true picture of tax burden. Taxes paid on government expenditure have no impact on the deficit, do not affect incentives, do not constitute a ‘burden‘ on economic activity and may also distort cyclical adjustment of the budget. We propose a number of adjustments to deal with these problems and apply them to data for Hungary, Poland and Slovakia. The results indicate that in these countries, the underlying (methodologically and cyclically adjusted) tax burden imposed on economic activity has followed different trends from those implied by the headline tax-to-GDP ratios. The results show that it is also important to look at the headline and adjusted measures of the tax burden in disaggregated terms, namely dividing the tax burden into labour, corporate and indirect tax components.

Hitelesek-e a vállalkozások ígéretei Magyarországon?

A piaci csere mindig igeretek csereje, es a benne reszt vevők szamara az egyik legnagyobb kihivas, hogy igereteiket hitelesse tegyek. A tanulmany a hitelesseg kozgazdasagi elmeletet attekintve amellett ervel, hogy a hitelesseg szeles korű megteremtesehez elsősorban megfelelő szankciokat nyujto intezmenyekre van szukseg. Egy – cegvezetők koreben elvegzett – kerdőives felmeres alapjan vizsgalja a hitelesseg jelenletet a magyar vallalkozasok kozotti uzleti kapcsolatokban, tovabba a cegek hajlandosagat arra, hogy ismeretlenekkel lepjenek kapcsolatra. Feltarja tovabba, milyen szerződeskikenyszeritő intezmenyekre hagyatkoznak a vallalkozasok. Szemben a Magyarorszagot jellemző „bizalomhiany” tezisevel, az adatok a hitelesseg szeles korű jelenletet jelzik. Sok ceg lep tul szemelyes es uzleti kapcsolathalojan, es teremti meg a hitelesseget e koron tul. Dominalnak a szemelyes cseret tamogato jatekszabalyok, de az intezmenyi rend hatarozott „nyugatias” vonasokat is mutat.* Journal of Economic Literature (JEL) kod: K12, L14, O17.

Fill the Gap – Measurement of the Cyclical Effect on Budgets

One of the most vivid discussions in every country is with regard to the assessment of fiscal policy. Since budgets are influenced by business cycles, there is enormous interest in disentangling the underlying fiscal position from the effect of the business cycle. The two main methods used by international institutions to determine this cyclical factor – the aggregated and disaggregated approaches – arguably do not fulfil the necessary requirements for obtaining correct results. In this paper we introduce an alternative disaggregated methodology which is not only able to incorporate theoretical considerations, but is also easily computable, and does not require unavailable data. We also demonstrate that if the deflators of variables are different, then the real cyclical component has to be corrected to obtain the nominal cyclical component. We show that standard cyclical adjustment methods applying constant elasticities are consistent with the broadest definition of discretionary measures, but possibly inconsistent with the underlying deficit. Standard estimations of the cyclical and underlying components can be faulted due to the specific non-linear features of tax systems and unemployment benefit schemes.