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Do financial variables help predict the macroeconomic environment?

Publication at Faculty of Social Sciences, Faculty of Mathematics and Physics, Centre for Economic Research and Graduate Education |
2011

Abstract

We empirically examine the interactions between the macroeconomic environment, monetary policy and the financial system in the Czech Republic. We find that the financial sector conveys useful, but somewhat noisy, information about future macroeconomic conditions.

Our results also indicate that monetary restriction leads to more prudent behaviour of commercial banks.