Introduction of soft budget constraint as an analyzing tool into public management. The case of the Hungarian public administration reform

Public management reforms are usually underpinned by arguments that they will make the public administration system more effective and efficient. In practice, however, it is very hard to determine whether a given reform will improve the efficiency and effectiveness of the public administration system in the long run. Here, I shall examine how the concept of the soft budget constraint (SBC) introduced by János Kornai (Kornai 1979, 1986; Kornai, Maskin & Roland 2003) can be applied to this problem. In the following, I shall describe the Hungarian public administration reforms implemented by the Orbán government from 2010 onward and analyze its reforms, focusing on which measures harden and which ones soften the budget constraint of the actors of the Hungarian public administration system. In the literature of economics, there is some evidence-based knowledge on how to harden/soften the budget constraint, which improves/reduces the effectiveness and hence the efficiency of the given system. By using the concept of SBC, I also hope to shed some light on the rationale behind the Hungarian government’s introduction of such a contradictory reform package. Previously, the concept of SBC was utilized narrowly in public management studies, mostly in the field of fiscal federalism. My goal is to apply the concept to a broader area of public management studies. My conclusion is that the concept of SBC can significantly contribute to public management studies by deepening our knowledge on the reasons behind the success and failure of public administration reforms.

Content and drivers of performance management in agency-type organizations of the hungarian public administration

The improving performance of public administration and the reform of public financing system have been on agenda in Hungary for many years, in accordance with the international trends. However, governments have not expected and supported creating of a performance-oriented public administration in a comprehensive and explicit way. Nevertheless, there are bottom-up initiatives at organizational level, which target performance-oriented organizational function. The research focuses on organizations of central public administration where the successful application of performance management methods is most likely based on the international literature. These are the so called agency-type organizations, which are in Hungary called autonomous state-administration organizations independent of the Government (e.g. Hungarian Competition Authority), government bureaus (e.g. Hungarian Central Statistical Office), and central offices subordinated to the government (either the cabinet or a ministry) (e.g. Hungarian Meteorological Service). The studied agencies are legally independent organizations with managerial autonomy based on public law. The purpose of this study is to get an overview on organizational level performance management tools applied by Hungarian agencies, and to reveal the reasons and drivers of the application of these tools. The empirical research is based on a mixed methods approach which combines both quantitative methods and qualitative procedures. The first – quantitative – phase of the author’s research was content analysis of homepages of the studied organizations. As a results she got information about all agencies and their practice related to some performance management tools. The second – qualitative – phase was based on semi-structured face-to-face interviews with some senior managers of agencies. The author selected the interviewees based on the results of the first phase, the relatively strong performance orientation was an important selection criteria.

The role of longevity risk in Hungary

In this paper, I analyze the role of longevity risk in Hungary in the public pension system and the life annuity segment of the life insurance market, which are two primary financial sectors of relevance to this special type of actuarial risk, using state-of-the- art econometric methodology. To this end, I present an overview and the mathematical background of several important current mortality forecasting techniques from the Lee–Carter model up to unifying paradigm of the Age–Period–Cohort family of models. After presenting the findings of a case study on the public pension system based on the paper of Bajk ́o, Maknics, T ́oth and V ́ekas, I conclude that longevity risk jeopardizes the sustainability of the Hungarian public pension system in the long run. In another case study, I present an analysis of the role of longevity risk in the pre- mium of private pension annuities, a relevant topic due to recent changes in a law on Hungarian voluntary pension funds, following an earlier analysis of M ́ajer and Kov ́acs. Based on the criterion on out-of-sample forecasting accuracy, I find that the Cairns–Blake– Dowd mortality forecasting model aimed specifically at modeling old-age mortality outperforms the Lee–Carter model applied by M ́ajer and Kov ́acs . Based on numerical results, I finally conclude that the role of longevity risk in the Hungarian life annuity mar- ket has increased significantly in the past decade and is likely to further increase in the future.