31 March 2025
The published studies by foreign and Hungarian experts in the March issue of our scientific journal are about attitudes towards the green transition, the evolution of trust in institutions during Covid-19, the EU accession bonus and the endogenous money supply approach. This time, the essay in the Our Vision column reviews the Hungarian policy issues of innovation-driven economic growth. An essay presents the work of the 2024 Nobel Memorial Prize Laureates in Economic Sciences. The feature article examines the impact of artificial intelligence on the labour market.
Most individuals in emerging markets are concerned about climate change but such concerns do not necessarily translate into a willingness to pay for environmental policies. According to Pablo García Guzmán and Zsóka Kóczán, beyond the ability to pay, people who expect to be better off in the future, who are more patient and who trust the government are more likely to be willing to pay for environmental policies. Policies also receive greater support if they take the form of subsidies, where the costs in terms of higher taxes are less salient.
Trust in central banks can influence inflation expectations, therefore it is important to understand trust processes. In their study, Zoltán Korsós and Eszter Baranyai examine how trust in central banks in the eurozone developed during the Covid-19 pandemic, using the ECB as an example. Although trust decreased, this was not a central bank-specific phenomenon. Their results point to the co-movements of trust in individual institutions and draw attention to the importance of understanding the trust dynamics of extremist groups.
2024 marked the 20th anniversary of the EU accession of ten economies. According to the study by Maxim Chupilkin, Zsóka Kóczán and Alexander Plekhanov, the experience of these countries was characterised by rapid growth in per capita incomes. In 2003, the GDP per capita of the EU-10 economies averaged 32 per cent of Germany’s. This increased to 55 per cent by 2023. Almost three-quarters of this convergence can be thought of as an ‘EU accession bonus’ – beyond the effects of convergence seen in other similar economies. This was facilitated by rapid growth in exports relative to GDP as these economies became deeply integrated into supply chains.
It is now generally accepted that the endogenous money supply approach is more suitable than the exogenous one in understanding the functioning of modern financial systems. The study by Péter Aradványi and Zoltán Szalai shows that the new approach has consequences for such earlier analytical frameworks as the relationship between the central bank balance sheet and the policy rate, the “crowding out effect” or, from an open economy perspective, the Triffin dilemma, the “impossible trinity”, the Lucas’ paradox, and the Feldstein-Horioka puzzle. The endogenous approach may allow past economic policy mistakes to be avoided.
The key to economic growth is increasing productivity, which is closely related to the level of research, development and innovation spending. Innovation investments should reach 3 per cent of GDP in the medium term. The state still needs to play a strong role in enhancing the innovation ecosystem, especially in creating and maintaining an appropriate support and regulatory environment. The essay by László Bódis and Ádám Kiss analyses the situation of Hungarian innovative enterprises from an international perspective and presents the policy measures that can ensure the sustainable growth of the competitiveness of the innovative corporate sector and thereby the Hungarian economy.
In his essay, István Kónya presents the research work of Daron Acemoglu, Simon Johnson and James Robinson, who were awarded the 2024 shared Nobel Memorial Prize in Economic Sciences, on the formation of institutions and their impact on development. One fundamental question in economics is why different countries have reached radically different levels of development today. The laureates explored the causal link between the institutional system and economic development. They demonstrated that adequate protection of property rights had a significant positive impact on long-term economic development.
Artificial intelligence can revolutionise the world of work. In his feature article, Máté Zsinkó shows how technological progress can transform the structure of global and Hungarian employment, and how adapting to changes as quickly as possible can help increase productivity.
In addition to the above, the March issue of the Financial and Economic Review includes one book review and four conference reports.
The publication can be viewed on the website of our Journal:
The Financial and Economic Review
We wish you a very pleasant reading.
Editorial staff of the Financial and Economic Review/Magyar Nemzeti Bank