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Non-Accelerating Inflation Rate of Unemployment Quantitative Analysis for the Czech Republic

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  • Martin Fukač

Abstract

Quantification of the Non-Accelerating Inflation Rate of Unemployment (NAIRU) is often discussed topic, mainly in the sense of its implementation into the monetary authority decision making. I believe that the NAIR U identification for the Czech Republic has not been published yet. Identified model for the short-run NAIRU is based on the neoclassical macroeconomics. The model is treated within the state-space framework allowing both time-varying parameters and unobserved variables to be identified using the extended Kalman filter with backward smoothing (EKFS). The starting point for the NAIRU model is Estrella and Mishkin (1998), Gordon (/996) and Staiger, Stock and Watson(/996). The EKFS application proved its usefulness in modelling economies in transition. Even if the NAIRU does not represent an operative criterion for the monetary policy, it can be a useful information source for its formation. The Czech NAIRU model is estimated on quarterly data.

Suggested Citation

  • Martin Fukač, 2000. "Non-Accelerating Inflation Rate of Unemployment Quantitative Analysis for the Czech Republic," Bulletin of the Czech Econometric Society, The Czech Econometric Society, vol. 7(12).
  • Handle: RePEc:czx:journl:v:7:y:2000:i:12:id:90
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    File URL: http://ces.utia.cas.cz/bulletin/index.php/bulletin/article/view/90
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    Keywords

    NAIRU; short-run NAIRU; long-run NAIRU; expectation augmented Phillips curve; unemployment gap; extended Kalman filter with backward smoothing; unobserved states; money illusion;

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications

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