Hungary's Economy

Topics: Economic growth, Inflation, Economics Pages: 5 (834 words) Published: December 3, 2014
Assignment #1
An analysis of Hungary's Economy
Abstract
I analyzed three parts of Hungary's economy from 1994 to 2009: real GDP growth, unemployment rate, and inflation rate. Unemployment and inflation share a similar time trend, compared to real GDP growth which is almost exactly opposite. This shows the relationship between all of the variables. As unemployment and inflation were going down from 1994 to around 2001, real GDP was increasing and remaining steady at a high plateau. As GDP fell in 2003, both inflation and unemployment started increasing. (EconLit E240, E310)

Hungary's Economy
After transferring the data for real GDP growth, unemployment and inflation from the OECD Statistical Annex Tables into graphs, it was possible to better analyze the behaviors of these variables.

The graph below, Figure 1, is shows a relationship between real GDP growth and time in Hungary between 1994 and 2009. As shown by the dashed time trend line, there is no time trend noticeable as the level in 2009 (approximately 2.9%) is very close to that of 1994 (approximately 3.1%). Between the years of 1997 and 2005, a cyclical behavior is seen with the percentage growth going up and down with every year. There is a peak in the GDP growth rate in the year 2000 at about 5.2%. A low-point is seen in 1996 and 2007 at about 1.3%. There could be multiplicative seasonality, but there is not sufficient information to make this assumption. Real GDP Growth Rate

Figure 1. Real GDP growth (%) in Hungary, 1994-2009. Note. The data is from Statistical Annex Table 1-26 in Organisation for Economic Co-operation and Development (OECD) (2008, June). Graph generated by the author using R (R Development Core Team, 2008).

Figure 2 shows a relationship between the unemployment rate and time in Hungary between 1994 and 2009. As shown by the dashed time trend line on the graph, there is a downward time trend. The unemployment rate goes from 11% in 1994 to 7.6% in 2009. There is no cyclical behavior seen in this graph, the movements are smooth and do not show any abrupt shifts. There is a peak in the unemployment rate in 1994 at 11%. A low-point is seen in the year 2001 at 5.8%. Unemployment Rate

Figure 2. Unemployment Rate (%) in Hungary, 1994-2009. Note. The data is from Statistical Annex Table 1-26 in Organisation for Economic Co-operation and Development (OECD) (2008, June). Graph generated by the author using R (R Development Core Team, 2008).

Figure 3 shows the relationship between the inflation rate and time in Hungary between 1994 and 2009. As shown by the dashed trend line, a downward time trend can be seen. The inflation rate goes from about 19.5% in 1994 to 3.1% in 2009. The peak of inflation was in 1995 when inflation was at 26.7%. The low-point was in 2005 when inflation was down to 2.2%. There is no cyclical behavior in this graph as the values differ from each other with every year. Inflation Rate

Figure 3. Inflation Rate (%) in Hungary, 1994-2009. Note. The data is from Statistical Annex Table 1-26 in Organisation for Economic Co-operation and Development (OECD) (2008, June). Graph generated by the author using R (R Development Core Team, 2008).

References
Organisation for Economic Co-operation and Development (2008, June). OECD Economic Outlook, 79. Retrieved September 9, 2008 from http://www.oecd.org/ R Development Core Team (2008). R: A language and environment for statistical computing. R Foundation for Statistical

Computing, Vienna, Austria. ISBN 3-900051-07-0, URL
http://www.R-project.org.

1. R Script
2.
3. date()
4. Hungary

References: Organisation for Economic Co-operation and Development (2008, June). OECD Economic Outlook, 79. Retrieved September 9, 2008 from http://www.oecd.org/
R Development Core Team (2008)
7. inflation <- ts(Hungary$inflation,start=c(1994,1),frequency=1)
8
9. real.gdp.growth.ts <- ts(real.gdp.growth,start=c(1994,1),frequency=1)
10
13. unemployment.ts <- ts(unemployment,start=c(1994,1),frequency=1)
14
17. inflation.ts <- ts(inflation,start=c(1994,1),frequency=1)
18
16 2009 3.1 7.6 3.1
> unemployment <- ts(Hungary$unemployment,start=c(1994,1),frequency=1)
> inflation <- ts(Hungary$inflation,start=c(1994,1),frequency=1)
> real.gdp.growth <- ts(Hungary$real.gdp.growth,start=c(1994,1),frequency=1)
> real.gdp.growth.ts <- ts(real.gdp.growth,start=c(1994,1),frequency=1)
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