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Looking back to the global financial crisis of 2008–2009, Hungary was among the first countries to be forced to make use of financial assistance from the EU and the IMF. The government, the MNB (the central bank of Hungary) as well as the domestic and foreign analysts cited the high public debt and the volume of unsecured foreign-currency loans as the main reasons for the crises. Though these were real weaknesses, this diagnosis was false as much as the following treatment. First and foremost, it was the inadequate level of foreign exchange reserves that made Hungary to request outside financial assistance.

The excessive fiscal tightening urged by the MNB only led to deepening of the crises. In general, the macropolicy – both fiscal and monetary policy – before, during and after the crises turned out to be painfully pro-cyclical. Due to the lack of sufficient reserves, the MNB became virtually powerless to intervene and could only watch from the side-lines as events unfolded. The orthodox mind-set after replenishing the forex reserves prevented it from implementing a broad scale of unconventional measures to ease the crises. The fiscal authority lost its capacity long before to reduce the severity of the crises. Thus, the excessive and incorrect structure of fiscal correction coupled with an unjustified orthodox monetary policy, the contraction of the Hungarian economy went much beyond the inevitable amount.

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whose currencies and financial markets are moving together, there is an increasing demand amongst investors to seek for a safe haven asset (SHA) at the episodes of economic and financial calamities. The severity of the 2007 financial crisis and the

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The opinions of people are expected to forecast their actions, and even major economic institutions rely on this correlation. This research paper examines a case when the opinion of people about their financial situation contradicts their financial-related actions. In 2012 in Hungary the general opinion of people about their financial situation was showing the lowest confidence in the world, with a significant declining trend, reaching an extremely low level. Although the general expectation would be that this pessimism triggers a set-back in consumer spending, figures show that Hungarians were on the other end of the scale regarding their expenditures and were greatly increasing their spending. This raises the question: why do people say they are in such a tough financial situation yet instead of saving they increase their spending? This paper presents a cross-country analysis that reviews the severity of this discrepancy, as well as proves the validity of the question by excluding several alternative explanations, followed by a recommendation and hypotheses for a detailed research to explain the phenomenon.

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Society and Economy
Authors: Prespa Ymeri, Arben Musliu, Jehona Shkodra, Iliriana Miftari, and Csaba Fogarassy

differential in poverty (captured through incidence, depth, and severity). The FGT index was used in other studies as well ( Awotide 2012; Aristondo 2018 ). Hence, we consider three versions of the income poverty index to shed more light on different aspects of

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the severity of the financial crisis, rather than the adoption of a flat tax regime, might explain the exceptionally negative growth performance. On can further investigate the causal link between the introduction of flat tax regimes and the GDP

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