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Macroeconomic impacts of the COVID-19 pandemic in the Czech Republic in the period of 2020-2021

Author

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  • Adéla Zubíková

    (Faculty of Economics, Prague University of Economics and Business)

  • Pavel Smolák

    (Faculty of Economics, Prague University of Economics and Business)

Abstract

This article provides a comprehensive summary of selected macroeconomic impacts of the COVID-19 pandemic in the Czech Republic, including an assessment of certain implemented fiscal and monetary policies, using data from 2019 (to compare the development of the economic situation during the COVID-19 pandemic with the period before the onset of the pandemic), 2020 and 2021 on a monthly or quarterly basis. Particular attention is paid to monetary policy effects, which, unlike fiscal policy, the Mundell-Fleming model considers effective in a small open economy with a freely floating exchange rate. The article also investigates the volume of fiscal measures taken to mitigate COVID-19 pandemic effects, the restrictive measures introduced to Czech households and firms as well as labour market developments during the period of 2019-2021, including quantification of the aggregate labour productivity index. The conclusions of the article are that, during the COVID-19 pandemic, macroeconomic indicators in the Czech Republic acted in accordance with the established partial hypotheses of the Mundell-Fleming model and in accordance with the hypothesis of the modified Phillips curve. Possible causes of the significant increase in inflation since September 2021 include 2020 nominal public and private sector salary growth, which showed faster growth than aggregate labour productivity, and the highly expansionary fiscal policy that characterized the 2021 pre-election period.

Suggested Citation

  • Adéla Zubíková & Pavel Smolák, 2022. "Macroeconomic impacts of the COVID-19 pandemic in the Czech Republic in the period of 2020-2021," International Journal of Economic Sciences, European Research Center, vol. 11(1), pages 117-145, April.
    • Handle: RePEc:aop:jijoes:v:11:y:2022:i:1:p:117-145
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    References listed on IDEAS

    as
    1. Eduard Hromada, 2021. "Development Of The Real Estate Market In The Czech Republic In Connection With The Covid-19 Pandemic," Proceedings of Economics and Finance Conferences 12713389, International Institute of Social and Economic Sciences.
    2. Löblová, Olga & Rone, Julia & Borbáth, Endre, 2021. "COVID-19 in Central and Eastern Europe: Focus on Czechia, Hungary, and Bulgaria," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 413-435.
    3. A. W. Phillips, 1958. "The Relation Between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861–1957," Economica, London School of Economics and Political Science, vol. 25(100), pages 283-299, November.
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    Cited by:

    1. Katarina Kramarova & Lucia Svabova & Barbora Gabrikova, 2022. "Impacts of the Covid-19 crisis on unemployment in Slovakia: a statistically created counterfactual approach using the time series analysis," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 17(2), pages 343-389, June.

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    More about this item

    Keywords

    macroeconomic policy; monetary policy; aggregate labor productivity; labour market data; public expenditure; Phillips Curve; crisis management; Czech Republic; COVID-19 pandemic; Mundell-Fleming model;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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