), production and indirectly also employment. In the retail market the consumer price index (CPI) is formed. We specify a simple … dynamic model with two state variables: CPI and PPI. Real variables - production and employment - are fully determined by CPI … shocks to the PPI inflation, production and employment equations. In the second part we implement the model on monthly data …

consumption. Aggregate consumption plays an important role in macroeconomic fluctuations and in the transmission mechanism. Czech …/Permanent-Income Hypothesis, including a standard model of consumption and incorporating credit supply. We first concluded that credit conditions … have a significant impact on household consumption, and that consumption is acutely sensitive to disposable income. Our …

increase in household consumption. …