Publication details

Czech Economy under Foreign Exchange Intervention Regimes

Authors

ORAVEC Tomáš VAŠÍČEK Osvald

Year of publication 2019
Type Article in Proceedings
Conference 37th International Conference on Mathematical Methods in Economics 2019
MU Faculty or unit

Faculty of Economics and Administration

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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