Policies should be paired with objectives on which they have the most influence: such is the main idea of Mundell?s principle of effective market classification. This paper examines and discusses whether this principle is fulfilled in the Czech economy. The author deals with the difficulty of...

We examine how written and oral central bank communications affect the level and volatility of interest rates. We use detailed daily data on the Czech central bank’s communication in 2007–2012. We find that financial markets respond to central bank communication. Short-term interest rates...

In this paper, the authors link real exchange rates and optimum currency area criteria. The authors examine the hypothesis that countries not fulfilling optimum currency area criteria in full will tend to have volatile bilateral real exchange rate. The authors find that, based on a study of data...

This paper shows that an economy’s behavior differs significantly according to assumptions made on the formation of inflation expectations. We analyzed the behavior of an open economy in a regime of explicit inflation targeting with commitment. The economy is exposed to three different shocks...

This paper provides an empirical analysis of the factors that caused deviations from the CNB’s inflation targets during the first ten years of inflation targeting in the Czech Republic. While in the short term, shocks to agricultural producer prices represent the most important factor,...

The authors of this paper argue that European Monetary Union (EMU) member countries are likely to respond differently to the single monetary policy of the European Central Bank. Disparities are inevitable, they maintain, given differences in monetary policy transmission due mainly to the...

This article discusses monetary policy issues that arise in connection with the expected entry of the Czech Republic into the EMU. The paper first discusses the disinflation path specified in the Czech National Bank?s (CNB) long-term monetary strategy, and the quantification of inflation...

Three alternative policy rules are contrasted in a model framework in this paper. Such simulation and their results provide a background for policy debate on the properties of alternative strategies of Czech monetary policy. The specific features of an economic transition period are reflected in...

Monetary Conditions IndicatorsMartin CIHAK ? International Monetary Fund, Washington, D.C.Tomas HOLUB ? Czech National Bank; Faculty of Social Sciences, Charles University, PragueThe article provides an overview of foreign-language (non-Czech) literature on monetary conditions indices. The...