Research Discussion Papers, Bank of Finland
A calibrated structural model of the Czech economy
Abstract: The paper presents a structural model framework for a
small open economy. The model, based on optimising households and firms,
has been calibrated on Czech macroeconomic data in order to develop an
analytic framework suitable for analysing key policy questions related to
the Czech Republic’s anticipated EMU accession. In order to be able to use
the model for assessing both pre- and post-accession policy issues, two
versions of the model – fixed and flexible exchange rate versions – were
developed. The suitability of the two alternative models for policy
analysis was subsequently tested on a series of impulse response exercises.
The dynamic responses of the two models to selected shocks and policy
experiments are plausible. Hence these results suggest that the presented
analytic framework can serve as a good starting point for analysing complex
policy issues facing the Czech Republic.
Keywords: monetary policy; monetary union; EMU accession; (follow links to similar papers)
JEL-Codes: E20; E31; E52; F41; (follow links to similar papers)
56 pages, October 1, 2003
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