Estimating Natural Rate of Interest and Equilibrium Exchange Rate: A Case of the Czech Republic
and | Dec 21, 2019
Published Online: Dec 21, 2019
Page range: 231 - 248
Received: Apr 25, 2019
Accepted: Oct 10, 2019
DOI: https://doi.org/10.2478/revecp-2019-0013
Keywords
© 2019 Zdeněk Pikhart et al., published by Sciendo
This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.
Article deals with estimating real natural interest rate and exchange rate to construct monetary conditions index suitable for the Czech open economy. Despite unobservable characteristics of underlying interest rates and exchange rate, the importance of reference indicators for monetary policy is crucial. Proposed monetary condition index in gap form examines monetary impulse on economic and credit cycle in inflation targeting model.