The Convergence of a Transition Economy: The Case of the Czech Republic
Jan Bruha (),
Jiri Podpiera and
Working Papers from Czech National Bank
In this paper we develop a two-country dynamic general equilibrium model by means of which we seek to explain the long-run paths of a converging emerging market economy. The modelâ€™s novel feature is the inclusion of quality investment to the standard framework of applied general equilibrium two-country models. This extension proves crucial ingredient for explanation of the trend in real exchange rate. Using a case study calibration of productivity and deep parameters for the Czech economy we demonstrate the ability of the model to consistently explain dynamics in key macroeconomic variables that are essential inputs for commonly used â€˜gap modelsâ€™ in monetary policy practice.
Keywords: Convergence; monetary policy; two-country modeling. (search for similar items in EconPapers)
JEL-codes: F12 F41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:cnb:wpaper:2007/3
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