There and Back Again – Six Fiscal Tales from the Past Decades

P. Kiss, Gábor (2022) There and Back Again – Six Fiscal Tales from the Past Decades. FINANCIAL AND ECONOMIC REVIEW, 21 (3). pp. 73-100. ISSN 2415-9271

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Abstract

A phenomenon known in the international literature that is nevertheless unaddressed is that the standard indicators used for analysing fiscal policy can yield misleading results. Creative accounting can distort basic statistics, dividing data into groups of “revenue” and “expenditure” leads to the same distorted results, and the common indicators of the cyclically adjusted balance are also misleading. Based on the indicators adjusted for the impact of these distortions, six fiscal episodes are defined in Hungary between 1995 and 2016. The first episode is the adjustment in 1995–1996. The structure of spending changed then between 1997 and 2001. In 2002–2006, consolidation was delayed after a sudden, major round of fiscal expansion. After this, several approaches were tried to ensure consolidation, in two steps, between 2007 and 2009 and then between 2010 and 2012. Finally, between 2013 and 2016 the structure of spending was changed once again.

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