Asymmetric Monetary Policy in the Czech Republic?

This paper analyes the hypothesis of whether asymmetric monetary policy could have contributed to the undershooting of the inflation targets of the Czech National Bank in the years 1998-2007. To this end, a non-linear Taylor Rule is estimated The results indicate that from 1998 to about 2002, the Czech National Batik responded more aggressively to forecasts of inflation exceeding the target than to those below the target. There is, however, no evidence for asymmetric monetary policy in estimates of the monetary policy rule derived from more recent data. This suggests that symmetric handling of the inflation tat-gets prevailed in the past several Years.