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If economists fret when governments crowd out corporate borrowers, Hungary offers an example of what happens when the government retreats and corporates rush into the debt markets. In theory, the result should be pleasant. The reality, at least in Hungary, is less simple. The Hungarian government’s deficit surged throughout the 1990s, rising from nothing at the beginning of the decade, to Ft378 billion ($2.1 billion) in 1995 the equivalent of 6.9% of GDP. Last year the government began to cut spending while economic growth boosted tax revenues, so much so that the deficit declined to Ft225 billion (3.3% |
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