The Resilient Adaptation of Budgets to Small and Shock-like Changes

Pulay, Gyula and Simon, József (2020) The Resilient Adaptation of Budgets to Small and Shock-like Changes. POLGÁRI SZEMLE: GAZDASÁGI ÉS TÁRSADALMI FOLYÓIRAT, 16 (Spec.). pp. 47-66. ISSN 1786-6553

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Abstract

After the 2008–2009 global financial crisis it became even more important that the countries observed the budgetary rules, while also being flexible in adapting to the changes occurring during the year. This is called fiscal resilience. This article presents the possible means to create fiscal resilience. Taking into consideration the recommendations of international organisations, it emphasises that the measures ensuring the flexibility of the budget shall be realised in a transparent manner. Based on the relevant European Union legislation and the Hungarian regulation and practice the authors argue that the content of resilience changes in the event of external shocks.In that case the resilience of the budget shall be subordinated to the recovery of the entirety of the economy, i.e. its resilience. The primary goal is not to maintain the deficit target but to avoid a severe and permanent economic downturn and then to encourage the recovery.

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