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Inflation Targeting as a Stabilization Tool: Its Design and Performance in the Czech Republic

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  • Viktor Kotlán
  • David Navrátil

Abstract

The article focuses on the development and performance of inflation targeting in the Czech Republic. It is shown that the particulars of the Czech inflation-targeting regime developed from a rather specific setting toward a framework based on international best practices. Its performance is evaluated using three methods. The results suggest that even though inflation targets have been missed more often than met, the practice of inflation targeting has significantly contributed to the stabilization of the Czech economy.

Suggested Citation

  • Viktor Kotlán & David Navrátil, 2003. "Inflation Targeting as a Stabilization Tool: Its Design and Performance in the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 53(5-6), pages 220-242, May.
  • Handle: RePEc:fau:fauart:v:53:y:2003:i:5-6:p:220-242
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    References listed on IDEAS

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    1. Laurence M. Ball & Niamh Sheridan, 2004. "Does Inflation Targeting Matter?," NBER Chapters,in: The Inflation-Targeting Debate, pages 249-282 National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Nadia Saleem, 2010. "Adopting Inflation Targeting in Pakistan: An Empirical Analysis," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 15(2), pages 51-76, Jul-Dec.
    2. Sofía Bauducco & Aleš Bulir & Martin Èihák, 2011. "Monetary Policy Rules with Financial Instability," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 61(6), pages 545-565, December.
    3. Katerina Smídková & Viktor Kotlán & David Navrátil & Ales Bulir, 2008. "Inflation Targeting and Communication; It Pays Off to Read Inflation Reports," IMF Working Papers 08/234, International Monetary Fund.
    4. Jarko Fidrmuc & Roman Horváth & Eva Horváthová, 2010. "Corporate Interest Rates and the Financial Accelerator in the Czech Republic," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 46(4), pages 41-54, January.
    5. Roman Horvath, 2007. "Modelling Central Bank Intervention Activity under Inflation Targeting," Economics Bulletin, AccessEcon, vol. 6(29), pages 1-8.
    6. Ian Babetskii & Fabrizio Coricelli & Roman Horvath, 2007. "Measuring and Explaining Inflation Persistence: Disaggregate Evidence on the Czech Republic," Working Papers 2007/1, Czech National Bank, Research Department.
    7. Horváth, Roman, 2009. "The time-varying policy neutral rate in real-time: A predictor for future inflation?," Economic Modelling, Elsevier, vol. 26(1), pages 71-81, January.
    8. Kateøina Šmídková & Aleš Bulíø, 2007. "Striving to Be “Clearly Open” and “Crystal Clear”: Monetary Policy Communication of the CNB," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 57(11-12), pages 540-557, December.

    More about this item

    Keywords

    inflation targeting; measuring performance of monetary policy;

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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