20 December 2023
The Our Vision column in the December issue of our scientific journal focuses on industrial policy. The published studies discuss central banks’ responses to inflation, the relationship between money supply and inflation, changing buying patterns in times of crisis, and the practical issues raised by default rates. One essay examines the effects of income inequality on economic growth. A feature article presents the dual nature of the Hungarian economy.
One of the striking developments of recent times has been the discovery of the re-launch button for an industrial policy that was put on ice decades ago. The essay by Oliver Kovács reviews the concepts of industrial policy in the United States and Europe, which are now in a renaissance, and presents the requirements for a modern version of policy. The Fourth Industrial Revolution of our time calls for a disciplined and resilience-driven industrial policy, which considers the management of the systemic industrial policy paradoxes prevailing in the socio-economic system to be its task.
The global inflationary pressures of the 2020s were felt by all agents in the economy. The world's central banks faced a significant challenge, and some institutions were also criticised for not attaching sufficient importance to the unfolding inflationary spiral. Using data from the period 1999–2022, Ruben Durkó examines how consistent the ECB’s current interest rate policy is with its own historical practice, and what possible reasons explain the deviation compared to past performance.
In addition to setting interest rates, many central banks conduct asset purchase or sale programmes. If an increase in the money supply causes inflation, the central bank may cause inflation with asset purchases, while asset sales can contribute to reducing inflation. However, different conclusions can be drawn from different monetary theories as to whether there is a clear, stable relationship over time between the money supply and inflation developments. In his study, Péter Simon investigates the strength of the relationship between money growth and inflation in Hungary.
In a crisis, consumers’ attitudes to shopping change. In the current situation, consumers are affected by several types of crisis to which different groups of consumers react in different ways. The authors present how all these situations influence consumer and buyer behaviour and attitudes towards the future, with spillover effects on the decision of economic agents. Mária Törőcsik, László Csóka, Péter Németh and Ágnes Neulinger show that women and families with small children are more sensitive to changes, but there are also those who are unable to react.
Bank default rate time series and their individual statistical properties play a key role in predicting bank loan losses. In their study, Gábor Szigel and Boldizsár Gyűrűs investigate the conditions under which these default rate time series can be considered stationary. The authors conclude that these time series, typically due to their shortness, can easily fail the stationarity tests even though they are probably stationary in reality. Therefore, they advise practitioners to decide on the stationarity of bank default rates not only on the basis of tests, but also taking into account other circumstances.
The essay by Réka Vitkovics explores the relationship between inequalities and economic growth. Inequalities do not only affect individual countries, but are a global challenge. Global and regional comparisons show that reducing inequality is critical for sustainable growth. The research presents economic policy measures that can help reduce inequalities and thus contribute to economic growth. The goal is the reduction in excessive inequalities, which is in line with the challenges and opportunities of the 21st century.
In her feature article, Ágnes Nagy deals with the dualities that can be observed in the Hungarian economy. The favourable performance of the 2010s was mainly based on quantitative indicators, while quality indicators showed a lag due to the lack of reforms. For knowledge- and innovation-driven growth, qualitative improvement and the elimination of dualities are essential, in addition to maintaining the results of the 2010s.
In addition to the above, the December issue of the Financial and Economic Review includes a book review and three conference reports.
The publication can be viewed on the website of our Journal:
https://en-hitelintezetiszemle.mnb.hu/
We wish you a very pleasant reading.
Magyar Nemzeti Bank