Marginal Propensity to Consume in Hungary: The long-term versus Short-term Challenges to Policy Makers

Keith Write, Arpita Shroff, Garry Smith
2017 Journal of Eastern European and Central Asian Research  
This study uses Hungarian quarterly data from the International Monetary Fund to estimate a distributed lag model whose coefficients allow derivation of the short-run and long-run marginal propensities to consume (MPC). MPCs are main factors determining the consumption, investment, government spending, and export-import multipliers of the economy. Hungary's economy has stagnated and its policy makers are exploring new ways to manage its economy. Our model reveals that the numerical value of
more » ... erical value of Hungarian short-run MPC is 0.4081 and the long-run MPC is 0.9458. These results are consistent with corresponding figures in emerging and advanced economies. These derived MPCs suggest that Hungarian economic policy makers should use fiscal instruments to bring these macroeconomic variables back to their long-term trend effectively.
doi:10.15549/jeecar.v4i2.167 fatcat:sxw32cky6vff7lnk367bdxnu54