Monetary Policy Case Study

Case Title:

Hungary's Monetary Policy: The Conflicting Objectives Case Study

Abstract:
This structured assignment is to accompany the case '205-116-1'. The abstract of the case is as follows: The government of Hungary set 1 January 2008, as the deadline for joining the European Monetary Union (EMU). One of the main conditions was to reduce inflation, which was substantially higher than other European Union countries. Checking inflation by increasing the rate of interest caused the forint, Hungary's currency, to soar, resulting in poor export performance and consequently widening trade deficit. On the other hand, continuous budget deficit also resulted in a rise in price level.

Pedagogical Objectives:

• To inflation.
• To rate of interest
• To exchange rate mechanism
• It also speculates on what would be the right path for Hungary to join the EMU.

Keywords : Hungary, Monetary policy, Fiscal policy, Fiscal deficit, Interest rate, Exchange rate, Money market, Bond market, Export, Import, Economics, Business environment, Gross domestic product, Europe, Currency