Redistributive fiscal policy in an open economy.

The study examines the effect of an expansive fiscal policy on a small open economy through a two-sector real model. The budget policy in the model redistributes the resources: the state budget is expansive if it enhances this redistribution. It is shown that in this case - given realistic assumptions of the consumption structure of those injured and those benefited by the redistribution - a two-sector real model is capable of illustrating many observations (stylized facts) seen as customary in the literature. The model is not calibrated, for its operation is a outline example, a numerical exercise in approximate qualitative description of certain experienced characteristics, and it cannot be viewed as an adjusted simulation of the actual economy. However, it is argued that in this simple, rudimentary form, it can be an interesting illustration, even for evaluating recent developments in Hungary.