CNB Research News

Quarterly Summary – 4/2022
Published jointly by the Economic Research Division and the Financial Research Division

— Our Latest Research


— Latest Journal Publications

The Power of Sentiment: Irrational Beliefs of Households and Consumer Loan Dynamics
by Zuzana Gric, Dominika Ehrenbergerová and Martin Hodula

Journal of Financial Stability, 2022, Vol. 59, pp. 1–16

Exiting from an Exchange Rate Floor in a Small Open Economy: Balance Sheet Implications of the Czech National Bank's Exchange Rate Commitment
by Michal Franta, Tomáš Holub and Branislav Saxa

International Journal of Central Banking, 2022, Vol. 18(2), pp. 51–105

The Effect of Higher Capital Requirements on Bank Lending: The Capital Surplus Matters
by Simona Malovaná and Dominika Ehrenbergerová

Empirica, 2022, Vol. 49, pp. 793–832

A Model of the Euro area, China, and the United States: Trade Links and Trade Wars
by Volha Audzei and Jan Brůha

Economic Modelling, Vol. 111(C), Article 105831, pp. 1–40

A Prolonged Period of Low Interest Rates in Europe: Unintended Consequences
by Simona Malovaná, Josef Bajzík, Dominika Ehrenbergerová and Jan Janků

Journal of Economic Surveys, 2022, Early View, pp. 1–47

Sparse Restricted Perceptions Equilibrium
by Volha Audzei and Sergey Slobodyan

Journal of Economic Dynamics and Control, 2022, Vol. 139(C), Article 104415, pp. 1–21


— Latest Working Papers

December 2022 – CNB WP 10/2022
Retail Fund Flows and Performance: Insights from Supervisory Data
by Martin Hodula, Milan Szabo and Josef Bajzík

This paper explores flow patterns in retail equity mutual funds related to past and future performance. We employ supervisory data of monthly fund inflows and outflows in the Czech Republic and produce several key findings that shed light on the behavior of households as investors. We find that retail investors are very sensitive to poor performance in times of aggregate illiquidity and when investing in funds that hold more illiquid assets. We also document that when facing illiquidity and a deteriorating performance, underperforming equity-investing funds experience lower investor purchases and a larger share of redemption requests.

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November 2022 – CNB WP 9/2022
From Central Counter to Local Living: Pass-Through of Monetary Policy to Mortgage Lending Rates in Districts
by Jiří Gregor, Jan Janků and Martin Melecký

This paper studies the pass-through from the market benchmark rate to interest rates on all newly issued residential mortgage loans in the Czech Republic. Using unique data on residential mortgages in the Czech Republic in 2016–2021, we show that the pass-through varies notably across districts and is significantly driven by local mortgage market concentration (bank market power) and the unemployment rate. 

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December 2022 – CNB RPN 2/2022
Disclosing Dissent in Monetary Policy Committees
by Jan Filáček and Lucie Kokešová Matějková

This article discusses the pros and cons of the various degrees of transparency of 14 central banks, including the Czech National Bank (CNB), in disclosing differences of opinion among monetary policy committee members. We argue that the attributed minutes of board members, which the CNB began publishing in February 2020, provided market participants and the public with an opportunity to better understand the underlying debate. It can also be argued that the attributed minutes have benefited the board members themselves by giving them with more room to present and explain their arguments.

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All Research Publications

— Hot Topics at Home and Abroad


— Global Economic Outlook

December 2022 – CNB GEO 12/2022
Fuel in Europe – What is the Data on Consumption Telling Us?
by Petr Polák

This article analyses the situation on the European market in the historical context and using the available economic knowledge. In 2022, in addition to high fuel costs, the European market has been hit by strong growth in electricity and natural gas prices, which has required a response from politicians and created additional costs for public budgets. Given the market situation and consumer preferences, it can be argued that fuel consumption, and thus the demand for primary raw materials, will remain at the current levels in the coming years.

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November 2022 – CNB GEO 11/2022
Long-run Impacts of High Energy Prices: Who Will Ultimately Benefit?
by Oxana Babecká Kucharčuková and Jan Brůha

For energy importers, rising energy prices represent a negative supply shock, but in the longer term there are mechanisms that could reduce the energy intensity of economic activity. Using historical data, the article analyses how economies adjust to changes in crude oil and natural gas prices. In the short run, high energy prices are beneficial for countries that export these commodities. In the long run, however, energy consumption declines and the energy intensity of economic activity decreases. As a result, net energy exporters take a smaller share of energy importers' GDP.

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October 2022 – CNB GEO 10/2022
Hyperinflation is a Different Beast
by Martin Kábrt

This article focuses on the phenomenon of hyperinflation and puts it in the context of recent developments in the media. It also seeks to shed light on the extent to which the risk of hyperinflation is currently real. The analysis builds on historical episodes and cases of hyperinflation and shows that the current developments in the vast majority of countries bear no resemblance to them. Nevertheless the article emphasizes the costs associated with entrenched price increases and cautions against irresponsible monetary and fiscal adventures.

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All Issues of Global Economic Outlook

— Thematic Articles on Financial Stability

December 2022 – CNB FS 2/2022
Relationship Between the MREL and Macroprudential Capital Buffers
by Lukáš Pfeifer and Libor Holub

This article studies the impacts of the minimum requirement for own funds and eligible liabilities (MREL) on the effectiveness of macroprudential capital regulation of the banking sector. It examines the MREL's effect on the usability of banks' capital buffers and any capital surplus for absorbing losses and lending to the economy in various economic scenarios. The article concludes that the introduction of the MREL may cause usability to decrease, especially during long adverse economic episodes in banks that use internal models to manage credit risk.

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All Thematic Articles on Financial Stability

— Central Bank Monitoring

December 2022 – CBM IV/2022
The Bank of England and its Gilt Market Intervention
by Barbara Livorová

The Bank of England (BoE) has had to respond to unprecedented risks to financial stability in fall 2022. A deterioration in the UK long-term government bond (gilt) market following the announcement of expansionary fiscal measures by the government led the BoE to intervene with time-limited gilt purchases. This article describes the sequence of events surrounding the interventions in the gilt market and presents the design of the intervention and the challenges faced. Last but not least, it mentions the importance of central bank communication when conducting such unconventional market interventions.

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All Issues of Central Bank Monitoring
November 2022 – CNBLOG
The Koruna is in Sight of its Fundamental Equilibrium Exchange Rate
by Luboš Komárek and Martin Motl

This blog article casts doubt on some of the statements made by domestic and foreign financial institutions regarding sustained and strong fundamental overvaluation of the koruna and the existence of potential future depreciation pressures.

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