A Simple, Model-Independent Analysis of Reasons for Non-Fulfillment of the Declared Inflation Target

Michal Skořepa ()

Chapter 3 in Evaluation of the Fulfilment of the CNB's Inflation Targets 1998-2007, 2008, pp 35-46 from Czech National Bank, Research and Statistics Department

Abstract: In the period 1998-2007, inflation very often deviated from inflation targets of the Czech National Bank, most of these deviations being in the direction of undershooting the targeted level. In this paper, a purely statistical, model-independent procedure is used to search for an answer to the question of whether this clear asymmetry in inflation target fulfillment can be explained more by an asymmetry in outside shock or an asymmetry of the Czech National Bank’s monetary policy. Our results indicate that the latter explanation is statistically more persuading. For the period since 2002, moreover, it looks like the decisions of the Czech National Bank’s Bank Board more or less sticked to the recommendations implicit in materials supplied by the Bank’s forecasting team; the bias in this second period, at least, can therefore be ascribed to the Bank‘s forecasting apparatus rather than preferences of the Bank Board as revealed in its monetary policy decisions.

Keywords: inflation targeting; inflation persistence; autoregression models (search for similar items in EconPapers)
JEL-codes: C22 E31 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)

Downloads: (external link)
https://www.cnb.cz/en/economic-research/.galleries ... 998-2007_chap_03.pdf (application/pdf)
https://www.cnb.cz/en/economic-research/research-p ... n-inflation-targets/ (text/html)

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: https://EconPapers.repec.org/RePEc:cnb:ocpubc:03

Access Statistics for this chapter

More chapters in Occasional Publications - Chapters in Edited Volumes from Czech National Bank, Research and Statistics Department Contact information at EDIRC.
Bibliographic data for series maintained by Tomas Karhanek ().