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Dynamika a rovnováha úspor, investic a úvěru v hospodářském cyklu: příklad České republiky
[Dynamics and Balance of Savings, Investments, and Credits in Business Cycle: The Case of the Czech Republic]

Author

Listed:
  • Martin Mandel
  • Vladimír Tomšík

Abstract

The goal of the article is a qualitative and quantitative analysis of the relationship among savings, investments and credits in a business cycle in the Czech Republic. The presented analysis brings specific recommendations on the interaction between monetary policy and macroprudential regulation. The article starts with a critical analysis of the Austrian Economic School and its monetary theory of business cycle, which provides a methodological base for further empirical analysis in the paper. Based on the data of the Czech economy, the authors empirically test a hypothesis whether credits create a financial bubble when a credit growth exceeds a real GDP growth. The financial cycle had a significantly higher volatility comparing to real business cycle volatility in the Czech Republic in the period 1997-2013. The existence of the credit bubble was confirmed by statistically significant model parameters, when using the differences in relative year on year changes of banking client credits as a depended variable and relative year on year changes of real GDP as an independent variable. Currently valid European regulation doesn't allow using the same tools to host regulator and supervisor towards the bank subsidiaries and branches in a need to react to the different phases of financial cycle. If a host supervisor needs to influence and safeguard the financial stability, it has only the following tools applying to both forms of banking operations in the host countries: counter cyclical capital buffer, capital regulation of real estate exposures, and setting the loan to value (income) limits.

Suggested Citation

  • Martin Mandel & Vladimír Tomšík, 2015. "Dynamika a rovnováha úspor, investic a úvěru v hospodářském cyklu: příklad České republiky [Dynamics and Balance of Savings, Investments, and Credits in Business Cycle: The Case of the Czech Republ," Politická ekonomie, Prague University of Economics and Business, vol. 2015(1), pages 32-56.
    • Handle: RePEc:prg:jnlpol:v:2015:y:2015:i:1:id:987:p:32-56
    DOI: 10.18267/j.polek.987
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    References listed on IDEAS

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    1. Jan Frait & Luboš Komárek & Zlatuše Komárková, 2011. "Monetary Policy in a Small Economy after Tsunami: A New Consensus on the Horizon?," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 61(1), pages 5-33, January.
    2. William R. White, 2006. "Procyclicality in the financial system: do we need a new macrofinancial stabilisation framework?," BIS Working Papers 193, Bank for International Settlements.
    3. David Aikman & Andrew G. Haldane & Benjamin D. Nelson, 2015. "Curbing the Credit Cycle," Economic Journal, Royal Economic Society, vol. 125(585), pages 1072-1109, June.
    4. Jan Babecký & Tomáš Havránek & Jakub Matìjù & Marek Rusnák & Kateøina Šmídková & Boøek Vašíèek, 2011. "Early Warning Indicators of Crisis Incidence: Evidence from a Panel of 40 Developed Countries," Working Papers IES 2011/36, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Nov 2011.
    5. Christopher Brown, 2008. "Inequality, Consumer Credit and the Saving Puzzle," Books, Edward Elgar Publishing, number 12877.
    6. Sofía Bauducco & Aleš Bulir & Martin Èihák, 2011. "Monetary Policy Rules with Financial Instability," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 61(6), pages 545-565, December.
    7. Rohit, 2011. "Income Distribution, Irrational Exuberance, and Growth," Review of Radical Political Economics, Union for Radical Political Economics, vol. 43(4), pages 449-466, December.
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    More about this item

    Keywords

    monetary and macroprudential policy; credit cycle theory; Austrian school;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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