CNB Research News

Designing Macro-Financial Scenarios: The New CNB Framework and Satellite Models for Property Prices and Credit

The paper sets out to present the Czech National Bank's new methodological framework for satellite models that are used for designing macro-financial scenarios in macroprudential stress testing. It also provides further technical details on models for residential property prices and for bank loans in the main credit segments (housing loans, consumer loans and loans to non-financial corporations).

The Rushin Index: A Weekly Indicator of Czech Economic Activity

This article introduces the Rushin, a weekly index of Czech economic activity. The index is based on alternative, high-frequency indicators and standard, low-frequency macroeconomic data. Although the information on the GDP growth rate is not used directly in the construction of the index, the indicator fits GDP data well, particularly in turbulent times such as the global financial crisis and the COVID-19 crisis. Therefore, it can be used for the real-time monitoring of economic activity, nowcasting and identifying turning points in the economy. The name of the index alludes to the name of Czechoslovakia’s first finance minister Alois Rašín and the timeliness (rush-) of the index (-in).

Holding the Economy by the Tail: Analysis of Short- and Long-run Macroeconomic Risks

This article puts forward a novel macro-financial empirical modelling framework that can examine the tails of distributions of macroeconomic variables and the implied risks. It does so without quantile regression, also allowing for non-normal distributions. Besides methodological innovations, the framework offers a number of relevant insights into the effects of monetary and macroprudential policy on downside macroeconomic risk. Examination of the conditional and unconditional US output growth distribution and investigation of the evolution of its first four moments strongly point to post-2008 unconventional monetary policies (quantitative easing) as a potential source of elevated long-run downside tail risk.

The Effects of Minimum Wage Increases in the Czech Republic

This article analyses employment effects of four minimum wage increases implemented in the Czech Republic during 2012-2017, which cumulatively increased the national minimum wage by 37 percent. Outcomes at the level of firm-occupation-county-specific job cells are examined employing an intensity-treatment estimator similar to that of Machin et al. (2003). The results show that minimum wage increases led to higher wages for low-paid workers and did not have significant impacts on their employment.

Modelling the Impacts of Climate Change on the Global Economy: Stagflationary Shock Looming

Based on model simulations, the authors in this article conclude that climate change will have global stagflationary effects overall and will need to be addressed by tighter monetary policy. The results of the analyses show that the choice and timing of global climate policy is decisive for the further impacts of climate change and the related costs.

The Shortage of Materials and Components as a Production-Limiting and Price-Increasing Factor

This article focuses on a very important issue for production and consumption: the current shortage of inputs. The pandemic-battered supply chains are preventing not only a fast economic recovery but are also increasing the already high inflation pressures. Unfortunately the article brings not so good news that corporations and consumers will feel the impacts of the pandemic for many months to come.

Decentralised Finance, Its Prospects and Limits: Is Blockchain Interoperability the Only Obstacle?

This article presents and discusses decentralised finance, i.e. products and services operating on permissionless blockchains in the cyberspace independently of official legal and regulatory institutions. The article focuses on whether it is possible to make decentralised finance a meaningful global alternative to traditional finance and what obstacles stand in the way.

Macroprudential Tools for the Insurance Sector

This article builds on the proposed changes to Solvency II in the macroprudential policy area currently under consideration at European Commission level. In its main part, the article suggests a possible design for the macroprudential policy framework in insurance.

The Inflation Target Tolerance Band and Its Drawbacks

The monetary policy reviews conducted recently in several major central banks focused, among other things, on how to best formulate the inflation target. One aspect of formulating the inflation target is its specification as a point or a range. This article summarises the results of several recent studies that address this issue and goes into more detail on the topic of inflation targets as discussed in the June issue of Central Bank Monitoring.