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Impacts of Macroeconomic Policies on Output in the Czech Republic: An Application of Romer's ISMP-IA Model

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  • Yu Hsing

Abstract

Extending Romer's IS-MP-IA model to include foreign trade and exchange rates and applying the GARCH method, the study came to the conclusion that real gross domestic product is negatively associated with the inflation rate, exchange rate depreciation, and the foreign interest rate and positively affected by government deficit spending and world output. Therefore, inflation targeting is an appropriate monetary policy, and the depreciation of the koruna would be harmful to the Czech economy even though it would help the export sector.

Suggested Citation

  • Yu Hsing, 2004. "Impacts of Macroeconomic Policies on Output in the Czech Republic: An Application of Romer's ISMP-IA Model," Prague Economic Papers, Prague University of Economics and Business, vol. 2004(4), pages 339-345.
    • Handle: RePEc:prg:jnlpep:v:2004:y:2004:i:4:id:246:p:339-345
    DOI: 10.18267/j.pep.246
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    More about this item

    Keywords

    inflation targeting; GARCH; IS-MP-IA model; exchange rates; deficit spending;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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