Monetary and Fiscal Policy Project

The Philippines and Hungary

by Yasmin Daly

Socioeconomic Factors

The Philippines’s total GDP: 272,200Hungary’s total GDP: 130,600

The Philippines’s per capita GDP: $4,700Hungary’s per capita GDP: $19,800

The Philippines’s econ. growth rate: 6.8% Hungary’s econ. growth rate: 0.2%

The Philippines’s unemployment rate: 7.4%Hungary’s unemployment rate: 10.5%

Hungary’s government is a parliamentary democracy.

The prime minister of Hungary is the head of the government and they have control of the party system. The President is mainly a ceremonial position, but they also are the head of state. The government

controls executive power, and shares the legislative power with the parliament. However, the judicial branch is

separate from the government and parliament. Hungary is also a part of the European Union.

Hungary;Government

The government of the Philippines is a republic. In the Philippines the President is both the head of state and the head of government. The

Philippines also has three branches of it’s government. There is the executive branch, the legislative branch, and the judicial branch.

The President has power over the executive branch, legislative

power is given to the Senate and the House of Representatives, and

the Supreme Court of the Philippines has control over the judicial branch. The Philippines is also run by governments that differ throughout provinces and cities. Although

these smaller governments have control, they still rely on the national government for money.

The Philippines;Government

Monetary Policy: The Hungarian National Bank (MNB), the central bank in Hungary, controls the countries monetary policies. It’s primary goal is to reach and sustain price stability in the nation. In general, a beneficial low inflation rate is around 2%, however, the aim for the MNB is around 3%. The goal rate for Hungary is slightly higher due to the fact that

the economy is still catching up to the rest of the EU.Fiscal Policy:

Since Hungary has joined the EU, it has to follow the

Maastricht criteria which includes a guideline for fiscal

policies the country must adopt. While these fiscal policies have

helped the economy of the country, Hungary is still below

average.

Monetary Policy:In the Philippines, the bank that controls monetary policy is the Bagko Sentral ng

Pilipinas, or BSP. The objective of BSP is the achieve price stability and sustaining economic growth. BSP is able to control aggregate demand and can influence the

amount of money circulating in the economy. The way BSP attempts to maintain price stability is by keeping aggregate demand from growing or shrinking which can cause inflation or high unemployment. In order to aid in the effectiveness of the monetary

policies, the Philippines uses an aggregate targeting framework to minimize expected inflation. More recently under the Inflation Targeting Framework for Monetary Policy,

the Philippines implemented policies to maintain a low, but positive level of inflation for optimal growth. The goal inflation rate of the Philippines has been around 3-4% through

the years.

Fiscal Policy:The Philippines has used government spending as a way to create jobs and

decrease unemployment. In attempt to do that, the Philippines has build roads, bridges, educational facilities. This

decreased self-poverty rates, and has helped the Philippines today by

strengthening the peso.

In conclusion, I think that the Philippines has implemented better monetary and fiscal policies. The data from the Philippines showed more economic

stability, which was the common goal of both Hungary and the Philippines. However, there was significantly more data about the policies the Philippines uses, so Hungary’s policies could be just as effective.

In regard to whether or not governments should interfere with the economy, I think that, while the economy will eventually fix itself, government intervention is a easy way of speeding up the economy. While some economist argue whether or not these policies should be used, the truth is that they do work in helping an

economy achieve balance. The economies of the countries I researched both benefited from the monetary and fiscal policies that were put in place by the

government. Therefore, I believe there is no issue in governments changing the economy to help it regain value and growth.

VSHungary

The Philippines

Sources-https://www.cia.gov/library/publications/the-world-factbook/geos/hu.html-http://en.wikipedia.org/wiki/Politics_of_Hungary-http://en.wikipedia.org/wiki/Economy_of_Hungary#Monetary_policy-https://www.cia.gov/library/publications/the-world-factbook/geos/rp.html-http://en.wikipedia.org/wiki/Politics_of_the_Philippines-http://en.wikipedia.org/wiki/Monetary_policy_of_the_Philippines-http://en.wikipedia.org/wiki/Fiscal_policy_of_the_Philippines-http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)