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  • 1 0000000404811396https://isni.org/isni/0000000404811396International Monetary Fund

Abstract

The case study of Hungary clarifies the specific macroeconomic policy requirements of countries in transition from centrally planned to market economies. The study, edited by Karen A. Swiderski, covers the period through 1990 and provides material needed to develop consistent projections of macroeconomic developments in Hungary.

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The remainder of the banking system consisted of four specialized banking institutions, including the National Savings Bank, 9 specialized financial institutions, 5 insurance companies, and 262 savings cooperatives.

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National Bank of Hungary, Annual Report 1990, p. 45.

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The National Saving Bank continued to have distinct reserve requirements from commercial banks.

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Residents were allowed to declare convertible currency holdings from non–specified sources without legal sanction; seventy-five percent was allowed to be deposited in a special travel account.

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National Bank of Hungary, 1989 Annual Report, p. 10.

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Note that b3 = 1 – λ and, therefore, λ = 1 – b3.

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Note that the degrees of freedom in estimation are limited by the small number of data observations. One consequence is that statistically significant results require large values for the calculated t- and F-statistics.

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Recall that the regression coefficient should be an estimate of 1–λ where 0 ≤ λ ≤ 1; see equation (2).

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Studies that discuss procedures for estimating the existence of a liquidity overhang include: Cottarelli, Carlo and Mario Blejer, “Forced Savings and Repressed Inflation in the Soviet Union: Some Empirical Results,” IMF, WP/91/55; Portes, Richard and David Winter, “Disequilibrium Estimates for Consumption Goods Markets in Centrally Planned Economies,” Review of Economic Studies, pp. 137–149, 1980; and Portes, Richard, Richard E. Quandt and Stephen Yeo, “Test of Chronic Shortage Hypothesis: the Case of Poland,” Review of Economics and Statistics, pp. 288–95, 1988.

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In the absence of the necessary information, it is assumed that all currency in circulation is held by households. In practice, the bulk of currency in circulation would be expected to be with the household sector.