Czech Economy under Foreign Exchange Intervention Regimes
| Authors | |
|---|---|
| Year of publication | 2019 |
| Type | Article in Proceedings |
| Conference | 37th International Conference on Mathematical Methods in Economics 2019 |
| MU Faculty or unit | |
| Citation | |
| Web | https://mme2019.ef.jcu.cz/files/conference_proceedings.pdf |
| Keywords | unconventional monetary policy; intervention; occasionally binding constraints; commitment; managed floating; real exchange rate rule |
| Description | After the economic recession with continued monetary policy easing, many European central banks have been forced to implement unconventional monetary policy instruments. In the case of the Czech economy, depreciation of domestic currency on foreign exchange market has been employed while maintaining nominal exchange rate against euro no stronger than the announced level. In the submitted paper, we inspect the small open Czech economy under several intervention regimes within DSGE model with occasionally binding constraints (OBC). In particular, we examine commitment, managed floating and real exchange rate rule intervention regimes in the economy constrained by zero lower bound at the same time. We provide economic behaviour for individual foreign exchange interventions based on impulse responses framework. We present responses to positive as well as negative unanticipated shocks hitting the economy. |
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