EconPapers    
Economics at your fingertips  
 

The History of Inflation Targeting in the Czech Republic through Optic of a Dynamic General Equilibrium Model

Jaromir Hurnik, Ondra Kamenik and Jan Vlcek ()

Chapter 8 in Evaluation of the Fulfilment of the CNB's Inflation Targets 1998-2007, 2008, pp 102-116 from Czech National Bank

Abstract: Using a dynamic general equilibrium model calibrated for the Czech Republic and the method of Kalman filtration we first estimate impact of structural shocks on the observed realization of 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 to the observed state of the economy and inflation target. Our results suggest that monetary policy was more restrictive than implied by the observed state of the economy and inflation target in three periods: from the second quarter of 1998 till the first quarter of 1999, from the third quarter of 2001 till the second quarter of 2003 and finally from the third quarter of 2004 till the end of 2005. In contrary, in period from the third quarter of 2003 till the second quarter of 2004 we identify looser monetary policy. Consequently and based on the assumption that monetary policy does not make mistakes, but focuses on a different inflation target than the officially announced one, we estimate an implicit trajectory of the inflation target. Inflation target that well fits the observed behaviour of the central bank is inflation targets fluctuating between 2 and 3 % since the year 2002.

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 (2) Track citations by RSS feed

Downloads: (external link)
https://www.cnb.cz/en/economic-research/.galleries ... 998-2007_chap_08.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:08

Access Statistics for this chapter

More chapters in Occasional Publications - Chapters in Edited Volumes from Czech National Bank Contact information at EDIRC.
Bibliographic data for series maintained by Jan Babecky ().

 
Page updated 2021-06-18
Handle: RePEc:cnb:ocpubc:08