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A Simple, Model-Independent Analysis of Reasons for Non-Fulfillment of the Declared Inflation Target

In: Evaluation of the Fulfilment of the CNB's Inflation Targets 1998-2007


  • Michal Skorepa


In the period 1998-2007, inflation very often deviated from inflation targets of the Czech National Bank, most of these deviations being in the direction of undershooting the targeted level. In this paper, a purely statistical, model-independent procedure is used to search for an answer to the question of whether this clear asymmetry in inflation target fulfillment can be explained more by an asymmetry in outside shock or an asymmetry of the Czech National Bank’s monetary policy. Our results indicate that the latter explanation is statistically more persuading. For the period since 2002, moreover, it looks like the decisions of the Czech National Bank’s Bank Board more or less sticked to the recommendations implicit in materials supplied by the Bank’s forecasting team; the bias in this second period, at least, can therefore be ascribed to the Bank‘s forecasting apparatus rather than preferences of the Bank Board as revealed in its monetary policy decisions.

Suggested Citation

  • Michal Skorepa, 2008. "A Simple, Model-Independent Analysis of Reasons for Non-Fulfillment of the Declared Inflation Target," Occasional Publications - Chapters in Edited Volumes,in: Katerina Smidkova (ed.), Evaluation of the Fulfilment of the CNB's Inflation Targets 1998-2007, chapter 3, pages 35-46 Czech National Bank, Research Department.
  • Handle: RePEc:cnb:ocpubc:03

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    Cited by:

    1. Volha Audzei & Frantisek Brazdik, 2015. "Monetary Policy and Exchange Rate Dynamics: The Exchange Rate as a Shock Absorber," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 65(5), pages 391-410, October.

    More about this item


    inflation targeting; inflation persistence; autoregression models;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • 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


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