Artikel

Inflation Target and its Impact on Macroeconomy in the Zero Lower Bound Environment: the case of the Czech economy

This paper uses a stochastic simulation of a DSGE model of the Czech economy to study the macroeconomic consequences of inflation target setting when interest rates are constrained by the zero lower bound. The distortions of this constraint depend non-linearly on the inflation target. For an inflation target of two percent the costs are negligible, but they increase steeply with lower target values. The largest impact is on the average values of output, consumption and investment; inflation is only slightly influenced. The volatility of all the variables considered increases significantly, but only for inflation targets that are close to zero. An inflation target of four percent does not bring additional benefits either in terms of lower volatility or in terms of higher average values.

Sprache
Englisch

Erschienen in
Journal: Review of Economic Perspectives ; ISSN: 1804-1663 ; Volume: 16 ; Year: 2016 ; Issue: 1 ; Pages: 3-16 ; Warsaw: De Gruyter

Klassifikation
Wirtschaft

Ereignis
Geistige Schöpfung
(wer)
Hloušek, Miroslav
Ereignis
Veröffentlichung
(wer)
De Gruyter
(wo)
Warsaw
(wann)
2016

DOI
doi:10.1515/revecp-2016-0001
Handle
Letzte Aktualisierung
10.03.2025, 11:46 MEZ

Datenpartner

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Objekttyp

  • Artikel

Beteiligte

  • Hloušek, Miroslav
  • De Gruyter

Entstanden

  • 2016

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