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The czech embarrassment of inflation targeting in transition


  • Martin Mandel
  • Vladimír Kosmata


In 1998 the Czech National Bank (CNB) changed its monetary policy framework and started to target inflation. The article discusses main theoretical aspects of inflation targeting and some practical problems with implementation of inflation targeting. The main characteristics of the inflation and monetary targeting are described in the first and second part. The third part deals with practical issues connected with inflation targeting (number of countries using inflation targeting, quality of inflation predictions, inflation and interest rate volatility). In the final part the CNB monetary policy function is estimated and the results are compared with the theoretical assumptions of the inflation targeting.

Suggested Citation

  • Martin Mandel & Vladimír Kosmata, 2000. "The czech embarrassment of inflation targeting in transition," Prague Economic Papers, University of Economics, Prague, vol. 2000(3).
  • Handle: RePEc:prg:jnlpep:v:2000:y:2000:i:3:id:80

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    References listed on IDEAS

    1. Julide Yildirim, 2003. "Currency Substitution and the Demand for Money in Five European Union Countries," Journal of Applied Economics, Universidad del CEMA, vol. 6, pages 361-383, November.
    2. Jonathan Benchimol, 2015. "Money in the production function: A new Keynesian DSGE perspective," Southern Economic Journal, Southern Economic Association, vol. 82(1), pages 152-184, July.
    3. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, January.
    4. anonymous, 2008. "Monetary policy report to the Congress," Web Site 16, Board of Governors of the Federal Reserve System (U.S.).
    5. Carl E. Walsh, 2010. "Monetary Theory and Policy, Third Edition," MIT Press Books, The MIT Press, edition 3, volume 1, number 0262013770, January.
    6. ., 2008. "Population Aging, Financial Markets and Monetary Policy," Chapters,in: Frontiers in Pension Finance, chapter 11 Edward Elgar Publishing.
    7. anonymous, 2008. "Monetary policy report to the Congress," Web Site 34, Board of Governors of the Federal Reserve System (U.S.).
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    Cited by:

    1. Josef Arlt & Martin Mandel, 2014. "The Reaction Function of Three Central Banks of Visegrad Group," Prague Economic Papers, University of Economics, Prague, vol. 2014(3), pages 269-289.
    2. Josef Arlt & Martin Mandel, 2012. "Je možné předpovídat repo sazbu ČNB na základě zpět hledícího měnového pravidla?
      [Is it Possible to Predict the CNB Repo Rate on the Basis of the Backward-Looking Monetary Rule?]
      ," Politická ekonomie, University of Economics, Prague, vol. 2012(4), pages 484-504.


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