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Asymmetric Monetary Policy in the Czech Republic?

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Abstract

This paper analyses the hypothesis of whether asymmetric monetary policy could have contributed to the undershooting of the inflation targets of the Czech National Bank in the years 1998–2007. To this end, a non-linear Taylor Rule is estimated. The results indicate that from 1998 to about 2002, the Czech National Bank responded more aggressively to forecasts of inflation exceeding the target than to those below the target. There is, however, no evidence for asymmetric monetary policy in estimates of the monetary policy rule derived from more recent data. This suggests that symmetric handling of the inflation targets prevailed in the past several years.

Suggested Citation

  • Roman Horváth, 2008. "Asymmetric Monetary Policy in the Czech Republic?," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 58(09-10), pages 470-481, December.
  • Handle: RePEc:fau:fauart:v:58:y:2008:i:9-10:p:470-481
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    Cited by:

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    3. Horváth, Roman & Maršál, Aleš, 2014. "The term structure of interest rates in a small open economy DSGE model with Markov switching," FinMaP-Working Papers 22, Collaborative EU Project FinMaP - Financial Distortions and Macroeconomic Performance: Expectations, Constraints and Interaction of Agents.

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    More about this item

    Keywords

    monetary policy; inflation targeting; undershooting;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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