Question

Analysis of Hungary’s disinflation in recent years based on the principles of macroeconomics. Use relevant macro data. Create some tables, graphs/charts. Relate your findings with some theories or models. What would be the theoretical expectations about change in inflation rate? What do you notice from the data? Do you think the data consistent with theoretical expectations? Explain “why” the finding based on your data is consistent or contrary to the theories. Thanks.

Answer 1

- Falling world food and energy costs, and where pertinent reduces in managed costs of energy, have been a significant driver of disinflation across EU nations outside the Eurozone.

- Besides, core inflation – in general inflation barring unpredictable food and energy costs – has additionally floated down, following cost patterns in the Eurozone, and progressively veering from improvements in the remainder of the world

- This proposes conceivable disinflationary overflows from the Eurozone to other EU nations, considering their nearby exchange joins.

- Inflation was on normal around 5% until 2011, yet, has begun to diminish quickly since 2012.

- The fall in inflation was driven by directed and utility value cuts. Inflation decelerated to - 0.2% in 2014, which was likewise impacted by falling oil costs just as by imported disinflation.

- Inflation desires have balanced downwards, however core inflation in 2014 stayed in a sure area.

- With the more vulnerable conversion scale going through to costs, inflation is required to increment bit by bit to arrive at the 3% focus of the national bank by the end of 2016.