<abstract xmlns="http://www.w3.org/1999/xhtml"><p>This paper presents three measures of the output gap estimated by a dynamic stochastic general equilibrium model of the Czech economy. We argue that the most plausible description of the business cycle provides the output gap defined as a deviation from a flexible price level of output, which is generated solely by permanent growth shocks. Our model shows that 2006-2008 overheating of the economy and the following 2008-2009 slump can be largely attributed to development in a world economy and export and import sectors, while the 2012-2013 recession was caused mainly by a combination of adverse domestic demand and cost shocks.</p></abstract>

This paper presents three measures of the output gap estimated by a dynamic stochastic general equilibrium model of the Czech economy. We argue that the most plausible description of the business cycle provides the output gap defined as a deviation from a flexible price level of output, which is generated solely by permanent growth shocks. Our model shows that 2006-2008 overheating of the economy and the following 2008-2009 slump can be largely attributed to development in a world economy and export and import sectors, while the 2012-2013 recession was caused mainly by a combination of adverse domestic demand and cost shocks.

Output gap in the Czech economy: DSGE approach

Faculty of Economics and Administration, Department of Economics

Review of Economic Perspectives

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Output gap in the Czech economy: DSGE approach"}

This paper presents three measures of the output gap estimated by a dynamic stochastic general equilibrium model of the Czech economy. We argue that the most...

Output gap in the Czech economy: DSGE approach

Published Online: Jun 26, 2019

Page range: 137 - 156

Received: Feb 14, 2019

Accepted: Jun 04, 2019

DOI: https://doi.org/10.2478/revecp-2019-0008

Keywords
DSGE model, labour market, output gap, small open economy

© 2019 Jakub Bechný, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Output gap in the Czech economy: DSGE approach

Published Online: Jun 26, 2019

Page range: 137 - 156

Received: Feb 14, 2019

Accepted: Jun 04, 2019

DOI: https://doi.org/10.2478/revecp-2019-0008

KeywordsDSGE model, labour market, output gap, small open economy

© 2019 Jakub Bechný, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
DSGE model, labour market, output gap, small open economy