Public Finance Quarterly Archive Articles

Impossibility Trilemmas in Hungarian Economic History (1867–1938)

11:45, március 11, 2018.

György Kovács
PhD, Associate Professor,
University of Szeged, Faculty of Economics and Business Administration

Bence Varga
PhD candidate, University of Szeged, Faculty of Economics and Business
Administration
Chief Supervisor, National Bank of Hungary

Published in: Public Finance Quarterly 2018/1. (p. 113-129.)



Summary: This study is intended to demonstrate how Schoenmaker’s financial trilemma and the Mundell–Fleming monetary trilemma took hold in Hungarian economic history between 1867 and 1938 – an era divided into five distinct periods –; in other words, which factors enjoyed priority over others in the individual periods. We also intend to detect the existence of any trade-off between the two trilemmas and to pinpoint the area in which it took place, while also attempting to identify shifts within the individual trilemmas. Each element of the trilemmas is presented separately, including the interaction between them. According to our results, a trade-off could be observed within the monetary trilemma during the years of consolidation under the Bethlen government and in the period of the economic crisis, while it was during the Bethlen consolidation that there was a trade-off between the trilemmas.

Keywords: economic history, monetary trilemma, financial trilemma

JEL codes: F30, G28, N23, N24



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