HUNGARIAN AGRICULTURAL ECONOMY AND THE „STRONG” HUF

Gazdag, László

Keywords: agricultural economy, strong HUF, imports, exports, domestic market.

Establishment and sustaining of stability of currency is the task of issuing bank while with realizing other economic targets (e.g. growth, employment, equilibrium) are dealing government regulation and institutions. Dominance of currency stability among economic indicators is today an accepted principle in western economic philosophy. Currency devaluation cuts both ways conserving outdated structure of exports through alleviation efficiency constrains. Import-dependence of Hungarian economy has a technological character therefore devaluation lead merely to inflational shock. For the agricultural sector a devaluation may cause many more negative impacts than positive ones. In such a case prices of imported inputs would rise while through more expensive foodstuffs domestic demand would be reduced.

Full article