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EXPANSIVENESS/ RESTRICTIVENESS OF MONETARY AND FISCAL POLICY IN THE CZECH REPUBLIC AND HUNGARY - COMPARATIVE ANALYSIS

Joanna Stawska

Abstract

Economic authorities (central bank and government), conducting the monetary and fiscal policy, affect the economy as well as each other. In pursuit of its goal, which is the desired level of inflation (the inflation target), the central bank applies appropriate monetary policy strategies with varying degrees of expansiveness/ restrictiveness measured by the interest rate. In turn, the government striving to achieve the goal which is the desired economic growth also uses strategies with a different degree of expansiveness and restrictiveness measured by the level of the budget deficit in relation to GDP. The decisions of economic authorities regarding the expansiveness or restrictiveness of policies are also influenced by many factors that the central bank and the government have no influence on, such as financial crises, supply shocks and others. The purpose of the article is to show the importance of the monetary and fiscal policy options in the economies of the Czech Republic and Hungary. It also stressed the context of monetary and fiscal game in relation to the direction (restrictiveness or expansiveness) of both policies. The study covered the years 2001-2017. To achieve the article`s objective the following research methods were used: presentation of statistical data and statistical research methods. As a result, it was noticed that the character of monetary and fiscal policy plays a significant role in the economies under study. The originality of the analysis carried out in this article is to emphasize the importance of proper conduct of monetary and fiscal policy and their significance in economic processes in the countries studied.

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DOI resolver: doi.org/10.5593/sgemsocial2018/1.3/S04.075

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