Development and Finance from issue 2010/2

Péter Ákos Bod

Essay on the Crisis and Hungarian Economic Thinking

- Abstract -

JEL A-11

The crisis has not yet ended, it has not yet become past history and thus suitable to be viewed objectively by economists. One may already draw a conclusion: the established view ‘we can now keep the economy on a sustainable, crisis-free growth trajectory’ became discredited in year 2008 but this crisis cannot end in the course of a few short years. In the developed part of the world, this stance had been justified, and quite rightly for a while, by balanced growth trends and controlled inflation, i.e. circumstances which seemed only be disturbed, but not broken by the ‘dotcom crisis’ around the millennium or any other external shocks. However, this understanding changed suddenly with the outbreak of the ‘subprime’ crisis that caused a serious recession both in the centre of economic development and in countries related to the economic core, as well as in semi-peripheral countries (like Hungary), which deprived this confident view of its empirical arguments. In Hungary, the mounting uncertainties around the views on the economy were intensified by the inevitable fall in prestige of economics due to the stagnation of the Hungarian economy and the problems inherent in the transformation process.

Péter Ákos Bod, DSc, professor of economics (Corvinus University of Budapest)

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