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Estimating Natural Rate of Interest and Equilibrium Exchange Rate: A Case of the Czech Republic

Pikhart Zdeněk () and Froňková Pavla ()
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Pikhart Zdeněk: University of Economics in Prague, Faculty of Finance and Accounting, W. Churchill Sq.1938/4, 130 67Prague 3 and also Ministry of Finance of the Czech Republic, Department of Economic policy, Macroeconomic Analysis Unit, Letenská 15, 118 10 Prague 1, Czech Republic
Froňková Pavla: Ministry of Finance of the Czech Republic, Department of Economic policy, Macroeconomic Analysis Unit, Letenská 15, 118 10 Prague 1, Czech Republic

Review of Economic Perspectives, 2019, vol. 19, issue 4, 231-248

Abstract: Article deals with estimating real natural interest rate and exchange rate to construct monetary conditions index suitable for the Czech open economy. Despite unobservable characteristics of underlying interest rates and exchange rate, the importance of reference indicators for monetary policy is crucial. Proposed monetary condition index in gap form examines monetary impulse on economic and credit cycle in inflation targeting model.

Keywords: Natural Rate of Interest; Equilibrium Exchange Rate; Monetary Conditions Index (search for similar items in EconPapers)
JEL-codes: D53 E43 F31 (search for similar items in EconPapers)
Date: 2019
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