Appendix I. Review of Estimation Methods
Appendix II. Description of the Flexible System of Global Models (FSGM)
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Prepared by Asmaa El-Ganainy and Nir Klein (both EUR), and Patrick Blagrave (RES).
See Elmendorf and Mankiw (1999) for a comprehensive literature survey on the macroeconomic effects of public debt.
See Box 4 of the Staff Report for the 2014 Article IV Consultation.
See Staff Report for the 2014 Article IV Consultation.
For instance, in the energy sector, the effective CIT rate can reach up to 50 percent (OECD, 2014).
In 2010, the government imposed a temporary price freeze on energy prices. In 2013, regulated energy prices in electricity, gas, and district heating for households were cut by a total of 20 percent in two steps, and the cost has been borne by foreign energy providers. In 2014, another round of government-mandated reduction of energy prices for households was approved by the Parliament to take place in three steps (the price of natural gas was lowered by 6.5 percent as of April 1; whereas the price of electricity will drop by 5.7 percent as of September 1, and that of district heating by 3.3 percent as of October 1).
See Chapter III for more details on Hungary’s recent labor market trends, reforms, and policies.
When considered in the context of recent history, this speed of adjustment seems reasonable, as the activity rate increased at roughly this pace during 2009–12.
Sectoral taxes are levied in Hungary on a number of sectors, particularly those with relatively large foreign ownership, including, financial, energy, telecommunication, and retail sectors. Such taxes adversely affect growth through their negative effect on the business climate, foreign investment, bank lending, competition, and inefficient allocation of resources. Sectoral taxes are proxied in the model using capital taxes.