Legislative and Economic Aspects of the Position of the Czech National Bank - Some Remarks on the Amendment to the Act on the Czech National Bank
| Authors | |
|---|---|
| Year of publication | 2002 |
| Type | Article in Periodical |
| Magazine / Source | Journal of Transforming Economies and Societies |
| MU Faculty or unit | |
| Citation | |
| Field | Economy |
| Keywords | independence; monetary policy; central bank; Czech National Bank |
| Description | It is not allowable for the economic policy to be uncoordinated that means to allow monetary and fiscal policies to aim at different targets or to aim at the given target in principally different and incompatible ways. Monetary policy should be determined with regard to fiscal policy objectives and on the other hand, fiscal policy should allow for the fact that a given measure will provoke a corresponding response of monetary policy. Uncoordinated implementation of each policy will probably make the situation worse. It will lead to overloading one policy and to replacing one imbalance by another. In better case the imbalance will be successfully eliminated, but with higher social costs than in case of a co-ordinated course of action. Problems of mutual co-ordination of monetary and fiscal policies will depend on two basic facts: (i) on the legislatively enshrined relationship between the government and the central bank (i.e. the degree of central-bank independence) and (ii) on setting macroeconomic targets, i.e. understanding the concept of macroeconomic balance or, as the case may be, quantification of the imbalance, which is still acceptable. Economic policy will obtain the best results, if monetary and fiscal policy measures (i.e. governments and central bank activities) will be mutually co-ordinated not at random, but according to the set rule, i.e. contracted central banks independence. It is also related with public setting and quantification of macroeconomic targets, position of the central bank with respect to the government, i.e. the degree of its independence and efficient public control. |
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