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Volume 58, Issue 9 -10


Asymmetric Monetary Policy in the Czech Republic?

Horváth, Roman

Year: 2008   Volume: 58   Issue: 9 -10   Pages: 470-481

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.

JEL classification: E31, E52, E58

Keywords: monetary policy, inflation targeting, undershooting


RePEc: http://ideas.repec.org/a/fau/fauart/v58y2008i9-10p470-481.html

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