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Output-Inflation Trade-off After a Quarter of a Century of Inflation Targeting
Kamarád, Martin ; Potužák, Pavel (advisor) ; Kadeřábková, Božena (referee)
This thesis estimates the treatment effect of inflation targeting adoption on inflation, inflation variability, output, and output variability for 25 explicit inflation targeting countries. I implement the propensity score matching methodology that takes into account the problems of non-experimental nature, such as selection bias or selection on observable, and allows me to effectively mimic properties of randomized experiment and compute unbiased treatment effect estimates. I introduce a variety of propensity score matching methods that were recently developed in the treatment effect literature, including Nearest Neighbor, Radius matching, Kernel matching, and Inverse Probability Weighting. The results indicate that both industrial and developing inflation targeting countries exhibit lower inflation levels and at the same time higher output growth than non-targeting countries. The estimates are however in most cases statistically insignificant. Moreover, it appears that both industrial and developing countries achieve combination of lower inflation variability and output variability compared to non-targeting countries. Nonetheless, majority of the estimates are again statistically insignificant. The results are to a small extent sensitive to the choice of propensity score matching method. Radius matching with tight calipers (r=0.005, r=0.001) tends to provide the most reliable estimates. Balancing properties of the models are reasonable and compared to the previous research the standardised biases are quantitatively better.
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Impacts of monetary policy of Czech national bank on the Czech economy since 1993 to 2015.
Mrzena, Michal ; Ševčík, Miroslav (advisor) ; Munzi, Tomáš (referee)
The aim of this thesis is to analyze impacts of monetary policy of Czech national bank on the Czech economy since 1993 to 2015. Last few years monetary policy has been often discussed topic in Czech republic. Instruments of monetary policy have been changing and it will be changed again. In this conditions the analysis of entire period of CNB existence is very attractive for author. The theoretical part of the thesis deals with economic theory of central bank. In this part the thesis talks in detail about the regimes of monetary policy and it is focusing on the inflation targeting. The practical part of the thesis deals with analysis of monetary policy in every year in terms of meeting the targets and their impact on the economy. The conclusion of this analysis is to evaluate the effectiveness of monetary policy from 1993 to the present.
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Evolution of monetary policy regimes and it is suitable in present
Frýbová, Kateřina ; Řežábek, Pavel (advisor) ; Zamrazilová, Eva (referee)
The current monetary policy has been a widely discussed topic. The main focus has been given to the inflation targeting and whether it is suitable in situations with low inflation and low interests rates. The present study is addressing the monetary policy regimes and evolution of targeting aggregates under inflation targeting. The goal of my thesis is to verify whether the interests rates close to technical zero don t cause systematically larger deviations of forecasts of inflation from reality. Having compared most monetary regimes, their advantages and disadvantages in the current situation, I have come to the conclusion that although inflation targeting is not absolutely perfect, the shortcomings and the pitfalls of other regimes are considerably less favourable. Although the inflation deviation is increasing, this is most likely attributable to the error of model and the overtly optimistic forecast of the Czech National Bank than to the possibility that the errors directly relate to the level of interests rates.
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Monetary policy of the Czech National Bank
Vaculka, Jan ; Rajl, Jiří (advisor) ; Brodani, Jana (referee)
This bachelor thesis is focused on the characteristic of the Czech National Bank including its a role in the czech bank system. The thesis focuses both on the evaluation of Monetary policy of the ČNB implemented, especially the way of its realisation in the targeting inflation regime and evaluating the success rate of achieving the inflation objectives which have been set up. Part of the thesis also deals with considering the posibility of accepting the unified european currency, The Euro, in the Czech Republic and its contributions and risks.
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Why do not central banks target nominal GDP?
Pavlík, Lukáš ; Komrska, Martin (advisor) ; Slaný, Martin (referee)
The purpose of this thesis is to explore the question why do not central banks target nominal GDP (NGDP). I find out with comparison of inflation targeting to NGDP targeting that they are different at supply-side shock but same at demand-side shocks. NGDP targeting at positive supply-side shock let the price level decline vice versa. Inflation targeting always tries keep inflation on the target, no matter what the direction of the supply-side shock is. In the case of comparison NGDP targeting to free-banking system I find out accordance in the question of fluctuation of the price level during demand and supply-side shocks. However these systems differ in the nature of structural problems of the economy. NGDP targeting has disadvantage in this area against free-banking system that it can cause bubbles on asset markets by unven increase of money supply and it can neglect real problems of the economy. Central banks and academic economists mostly agree that NGDP targeting is not suitable mainly due to problems with GDP data quality, threat of instable inflation and troubles with estimation of nature rate of output. In the meantime they prefer inflation targeting even though this monetary regime has showed its weaknesses too.
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Evaluating the Czech inflation targeting regime as a framework for monetary policy and maintaining price level stability between years 1998 and 2014
Kratěna, Tomáš ; Šimíček, Petr (advisor) ; Štěpánek, Pavel (referee)
After the colapse of pegged currency rate policy, which was excersised by the Czech national bank in period between 1993 and 1997, a demand for a new framework of monetary policy for Czech Republic arised. This demand was satisfied by inflation targeting regime, which CNB, as a first central bank in the former socialist region, started to exercise on january 1st 1998. This step started a discussion about suitability of this policy for small opened and transitive economy. The aim of this thesis is to evaluate how succesfull inflation targeting as a framework of monetary policy for price level stability was. The main research method is comparison between inflation target and actual inflation rate measured on CPI by CZSO in the time horizon between years 1998 and 2014.
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Why central banks target a positive rather than zero inflation?
Horák, Petr ; Potužák, Pavel (advisor) ; Slaný, Martin (referee)
This bachelor thesis deals with the reasons why central banks set inflation targets positive and not zero. The central bank has three main reasons for positive target. One results from inaccurate measurement of inflation by CPI, which overstates inflation. Economists don't concur about size of this upper bias, but that is surely significant. Another reason for the positive inflation target may be asymmetric nominal wage rigidity. Again, there is not consensus about existence of wage rigidities, but in this case, possible impact of nominal wage rigidities on the optimum inflation is very limited. The last main reason is the fear of achieving the zero lower bound of nominal interest rates, and thus the inability to stimulate economy by lowering interest rates. Central banks have also less conventional tools of monetary policy, and therefore the fear of achieving the zero lower bound may be exaggerated. The result of economic models is optimum inflation in a range from negative to marginally positive, thus considerably less than usual inflation target.
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Inflation targeting in case of imminent deflationary pressures - the example of CNB
Plachý, Matěj ; Koderová, Jitka (advisor) ; Dvořák, Michal (referee)
This diploma thesis focuses on the use of inflation targeting as monetary policy regime in a situation of imminent deflation. The thesis is divided into three main parts. The first part introduces the basic mechanism of inflation targeting with its basic elements and describes its possible failure. The second part focuses mainly on the analysis of the economic factors which contributed to achieving the zero lower bound for the repo rate of CNB. The third part presents an alternative (unconventional) monetary policy instruments in case of achieving zero lower bound, in particular the use of the exchange rate. The end of the last part of this thesis analyzes the development of key macroeconomic indicators in the Czech Republic.
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Inflation targeting in an environment of deflationary pressures
Krupička, Josef ; Koderová, Jitka (advisor) ; Revenda, Zbyněk (referee)
This research paper on monetary policy focuses on strategy of inflation targeting and its modification in an environment of deflationary pressures. Focus of this paper is based on three main points that correspond to the content of individual chapters. The first point is a theoretical analysis of the main attributes of inflation targeting with emphasis on analysis of the functioning of the transmission channels. The second point is an analysis of implementation of this strategy in the Czech National Bank and in the Reserve Bank of New Zealand. In this point separate analysis was made of the development of inflation targeting and transformation of relationship between macroeconomic variables in transmission mechanism. The third point then debates the modification of monetary policy instruments in the context of inflation targeting adopted by the Czech National Bank, with an emphasis on the introduction of exchange rate commitment. Throughout the work are used simple methods for analysis with further emphasis on the actuality. The conclusion summarizes the findings and evaluates the modification of the inflation targeting strategy as a positive phenomenon in the context of evolution of monetary policy.
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Central bank monitoring - June 2013
Česká národní banka
Latest monetary policy developments at selected central banks and news. Spotlight: „Flexibility of inflation targeting“. Selected speech: „Many targets, many instruments. Where do we stand?“ by Mervyn King (the outgoing governor of the Bank of England).
Fulltext:  PDF; PDF
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