Prague Economic Papers 2004, 13(4):339-345 | DOI: 10.18267/j.pep.246

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

Yu Hsing
College of Business and Technology, Southeastern Louisiana University, Hammond, LA 70402, USA (e-mail: yhsing@selu.edu).

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.

Keywords: inflation targeting, GARCH, IS-MP-IA model, exchange rates, deficit spending
JEL classification: E5, E6, F4

Published: January 1, 2004  Show citation

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Hsing, Y. (2004). Impacts of Macroeconomic Policies on Output in the Czech Republic: An Application of Romer's ISMP-IA Model. Prague Economic Papers, 13(4), 339-345. doi: 10.18267/j.pep.246
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