Central bank`s reaction function
|Author:||Bc. Filip Rozsypal|
|Year:||2005 - summer|
|Leaders:|| PhDr. Michal Hlaváček Ph.D.
|Work type:|| Bachelors
|Awards and prizes:|
|Abstract:||This paper focuses on the central bank´s decision making. First two chapters inform the reader about central bank`s role and the monetary instruments in general and in the Czech republic case in perspective of the moterary crisis 1997.
In the third chapter, Czech central bank`s decision making is analyzed. We apply the Logit method to deal with cathegorical data. The input is generated from the Record of Central bank`s Council Sessions, from january 1998 to march 2005.
The analysis unveiled following results. For change the rates, the main reason is the inflation development. In 1998 and 1999, the tendency to lower the rates was much higher then in the rest of the period. There are some concerns that central bank postpones it`s decisions by waiting on quarterly Inflation report. Any evidence of breaching the central bank`s independency has not been discovered