Output gap in the Czech economy: DSGE approach
| Authors | |
|---|---|
| Year of publication | 2019 |
| Type | Article in Periodical |
| Magazine / Source | Review of Economic Perspectives |
| MU Faculty or unit | |
| Citation | |
| Web | http://nho.econ.muni.cz/19-2019/2-2019/output-gap-czech-economy-dsge-approach |
| Doi | http://dx.doi.org/10.2478/revecp-2019-0008 |
| Keywords | DSGE model; labour market; output gap; small open economy |
| Attached files | |
| Description | 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. |
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