Quantifying the Effects of the CNB's Exchange Rate Commitment: A Synthetic Control Method Approach

Matej Opatrny

No 2016/17, Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies

Abstract: In this paper I evaluate the quantitative effects of the Czech National Bank's commitment to keep the Koruna from appreciating that were put in place in 2013. I focus its on the impact on output, unemployment, and inflation. I use the synthetic control method, which allows me to compute the counter-factual development of the Czech economy in the absence of the commitment. I find that, until the end of 2015, the commitment helped create about 100,000 jobs. The effect on overall output is also strongly positive, almost 2% for growth in 2015, but only marginally statistically significant, which might be connected to disturbances created by changes in excise taxes. The effect of the commitment on inflation is positive but not statistically significant at standard levels.

Keywords: Inflation; Unemployment; Output; Currency; Monetary Policy; Synthetic Control Method (search for similar items in EconPapers)
JEL-codes: E42 E47 E50 E51 E52 E58 (search for similar items in EconPapers)
Pages: 35pages
Date: 2016-08, Revised 2016-08
New Economics Papers: this item is included in nep-mac, nep-mon and nep-tra
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Citations: View citations in EconPapers (8)

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Journal Article: Quantifying the Effects of the CNB's Exchange Rate Commitment: A Synthetic Control Method Approach (2017)
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