IMPACT OF CURRENCY INTERVENTIONS ON THE ECONOMIC DEVELOPMENT IN THE CZECH REPUBLIC
| Authors | |
|---|---|
| Year of publication | 2015 |
| Type | Article in Proceedings |
| Conference | ECONOMIC RECOVERY IN THE POST-CRISIS PERIOD |
| MU Faculty or unit | |
| Citation | |
| Field | Economy |
| Keywords | Czech economy; currency market; interventions; central bank |
| Description | The Czech economy was struck by the world financial crisis after 2008, similarly to other economies in the region. Monetary as well fiscal policies reacted and tried to improve economic performance. Foremost, the Czech National Bank (CNB) decreased its main interest rates very close to zero. Regardless of such measures, monetary development in the Czech Republic was heading towards deflation in the autumn of 2013. The CNB did not have any ordinary instrument in its portfolio and decided to apply non-orthodox measures in the form of intervention on the foreign exchange market. The intention was to depreciate the Czech crown and thus via exchange rate channel increase inflation in the country. Applying the SVAR model, this paper aims to find out whether the intervention had an impact on price level, exports, production, and interest rates.. Contrary to expectations, we did not find inflationary impact of the measures on the price level. We only discovered impact on exports with the highest influence during the first three months. |
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