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Asymmetric Monetary Policy in the Czech Republic?

Roman Horvath

Czech Journal of Economics and Finance (Finance a uver), 2008, vol. 58, issue 09-10, 470-481

Abstract: This paper analyses the hypothesis of whether asymmetric monetary policy could have contributed to the undershooting of the inflation targets of the Czech National Bank in the years 1998–2007. To this end, a non-linear Taylor Rule is estimated. The results indicate that from 1998 to about 2002, the Czech National Bank responded more aggressively to forecasts of inflation exceeding the target than to those below the target. There is, however, no evidence for asymmetric monetary policy in estimates of the monetary policy rule derived from more recent data. This suggests that symmetric handling of the inflation targets prevailed in the past several years.

Keywords: monetary policy; inflation targeting; undershooting (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 (search for similar items in EconPapers)
Date: 2008
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Handle: RePEc:fau:fauart:v:58:y:2008:i:9-10:p:470-481