Parallel movement of inflation, domestic and foreign equilibria

The paper attempts to reveal the mechanism of the inflationary policy of the Hungarian governments of the transition period. It investigates whether forced inflation is used as a means of improvement of foreign and domestic equilibria. According to the empirical results it can be deduced that the governments were not highly committed in the struggle against inflation, sometimes they even sacrificed the goal of suppressing inflation. There are, however, some indications, for a cyclical alteration of the pattern of inflation but the existence of the four year business cycles corresponding to those of the general elections could not be unequivocally proven.