ABSTRACT
The fundamental economic transformations currently sweeping central and eastern Europe provide economists with a unique opportunity to study the role and impact of monetary and fiscal policies. This chapter provides a very brief overview of the macroeconomic performance of the three countries and discusses a brief comparative survey of the principal financial sector reforms in Hungary, Poland, and Czechoslovakia since the late 1980s. It discusses whether a credit crunch has occurred in these countries. Reforms aimed at lessening the role of central planning began much earlier in Hungary than in the other Central European countries. The potential shortage of liquidity we have alluded to is akin to a credit crunch in that "if firms have limited access to credit or if interest rates are high, the increase in production costs would lead to a credit crunch". Commercial-banking type operations were transferred from the National Bank of Hungary to newly created commercial banks.
