Comparison of effects of expansionary monetary policy in the Czech Republic and Slovakia

Abstract

The ongoing process of globalization has affected the way the monetary policy is conducted – and this is especially the case of small open economies, where the economic developments are heavily affected by the developments abroad. Therefore, the aim of this paper is to investigate the effects of unconventional monetary policy in two very open economies – Slovakia and the Czech Republic in the post-crisis era – the two rather similar very open economies. We assess the effects of their monetary policies by estimating their impact on the banking sector in both countries. We employ two cointegrating estimators – DOLS and FMOLS, so that we can assess the dynamics of the relationship between the developments of main balance sheet items of the respective central banks and the aggregate bank lending to various sectors of the economy. We do find evidence that unconventional policies of both central banks did lift bank lending – with the effect being stronger in Slovakia and for the QE policies. In both countries, the effect was more pronounced for the bank lending to household sector – specifically on housing related loans. Finally, we do not find evidence that the increasing openness of these two already very open economies affected the transmission of monetary policies into the banking sector.

Where Does Value-Added Flow in Gross Exports, Mr. Newton? Global Supply Chains and New Regionalization's Effects in the Asia-Pacific

“…We conducted two distinct types of evaluations. Models with cross-sectional data allow us to compare differences between nations, whereas analyses with panel data with fixed effects offer a dynamic advantage, focusing on changes over time (Fišera, 2022;Hsiao, 2014). PPML models were computed in RStudio using the Gravity 1.0, sandwich, and lmtest packages.…”

“…In addition to the methods mentioned earlier, we incorporated the difference-in-differences (Dif-in-Dif) approach by adding the A-P BRIt interaction term to our specification (Fišera, 2022). We will closely monitor the significance of this variable to assess the impact of BRI membership on exports and exported value-added for 14 A-P BRI countries.…”