Economics at your fingertips  

The History of Inflation Targeting in the Czech Republic Through the Lens of a Dynamic General Equilibrium Model

Jaromir Hurnik, Ondra Kamenik and Jan Vlèek ()
Additional contact information
Jan Vlèek: Czech National Bank,

Authors registered in the RePEc Author Service: Jan Vlcek ()

Czech Journal of Economics and Finance (Finance a uver), 2008, vol. 58, issue 09-10, 454-469

Abstract: Using a dynamic general equilibrium model calibrated for the Czech Republic, we first estimate the impact of structural shocks on the observed realizations of the interest rate and inflation, while the main focus is put on the estimation of monetary policy shocks. These occur whenever monetary policy is not set in accordance with the observed state of the economy and the inflation target. Our results suggest that monetary policy was more restrictive than implied by the observed state of the economy and the inflation target in three periods: 1998Q2–1999Q1, 2001Q3–2003Q2, and 2004Q3–2005Q4. On the contrary, the period from 2003Q3 to 2004Q2 was characterized by relatively loose monetary policy. Based on the assumption that monetary policy focuses on a different inflation target than the officially announced one, we estimate the implicit trajectory of the inflation target for the Czech Republic. This implied target fluctuates between 2 and 3 percent in 2002–2007.

Keywords: monetary policy shock; dynamic general equilibrium model; Kalman filtration (search for similar items in EconPapers)
JEL-codes: E31 E43 E52 (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

More articles in Czech Journal of Economics and Finance (Finance a uver) from Charles University Prague, Faculty of Social Sciences Contact information at EDIRC.
Bibliographic data for series maintained by Natalie Svarcova ().

Page updated 2021-06-06
Handle: RePEc:fau:fauart:v:58:y:2008:i:9-10:p:454-469