Unorthodox hungarian public finances in academic background and international comparison

Abstract

The paper introduces into the reshaped Hungarian public finance system and provides historical background and international context of the recent policy changes. Besides, the study describes some deficiencies of neoliberal financial system that manifested inter alia in collapse of US mortgage market. Until 2010, Hungary was a 'front-runner' in implementing neoliberal disciplines. Afterwards, experiencing many disadvantages of the neoliberal economic system both in micro and macroeconomic level, Hungary started to balance all the negative effects caused. This, however, goes together with the critics of neoliberal disciplines and emphasizes the necessity of changes that is usually described as unorthodox. According to the viewpoint of the author, the public finance system of a developing Central-European economy should reflect the characteristics of the historical and cultural background of the country including economic issues as well as the time required to adopt new ideas. After the collapse of soviet-type planned economy, Hungary started to implement neoliberal market economy without leaving any time to the Hungarian economy and society to prepare for it. After 20 years of neoliberal market based economy experience, the way of Hungarian transformation is finally proved to be inappropriate - Hungary cannot resist to the 2008 financial crisis and required loans from international organizations to survive. Contrary, the author consider the increasing state influence over the economy (e.g. regulations) as a desirable step, since it suits better to the circumstances of developing countries (not only for Hungary). The increased state influence, however, fits better to the declared objectives of European Union (e.g. it ensures sustainable development course) so the critics about the recent unorthodox measures are not well-established.