Financial crisis and inequality in Hungary

Arbeitspapier

The goal of this paper is to analyze the connections Hungarian income and wealth distribution on the one hand, and the macroeconomics impacts of the global financial crisis of 2007-2008 on the other hand. To do this, I build a heterogenous agent, dynamic, general equilibrium model, which I calibrate using Hungarian income distribution data before the crisis. The model is then used to study both the impact of the financial crisis on income and wealth inequality, and the role of income and wealth inequality in the macroeconomic developments after the crisis. Results indicate that (i) the long-run capital stock rises, and the interest rate falls, but the effect is quantitatively small; (ii) the long-run income and wealth distributions only change moderately; and (iii) the short-run consumption response of low-wealth household is very strong, and drives a sizable aggregate consumption drop as well.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: KRTK-KTI Working Papers ; No. KRTK-KTI WP - 2021/32

Classification and Topics

• Classification: Wirtschaft ; Computational Techniques; Simulation Modeling ; Macroeconomics: Consumption; Saving; Wealth ; Financial Markets and the Macroeconomy ; Money and Interest Rates: Forecasting and Simulation: Models and Applications
• Subject: heterogeneity ; income shocks ; simulations ; borrowing constraint

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kónya, István
• Event: Veröffentlichung
• (who): Hungarian Academy of Sciences, Institute of Economics, Centre for Economic and Regional Studies
• (where): Budapest
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/256903
• Last update: 10.03.2025, 11:43 AM CET