Business Cycle in Czechoslovakia Under Central Planning: Were Credit Shocks Causing it?

November 1, 1996

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines credit origins of the business cycle in the former Czechoslovakia. Industrial production is found to be cointegrated with various measures of bank credit during 1976-90 and it is shown that noninvestment credits are Granger-causing industrial production and that a feedback relation exists between investment credits and industrial production. Although the potency of credit supply shocks to industrial production has been changing, production decline (growth) seems to follow credit tightening (loosening). However, the paper confirms that credit shocks were only a minor part of the output decline in 1989-90.

Subject: Bank credit, Business cycles, Credit, Econometric analysis, Economic growth, Industrial production, Money, Production, Vector autoregression

Keywords: Bank credit, Business cycles, Credit, credit shock, credit supply, credit view, credits Granger-causing, firm, Global, Industrial production, investment, investment credit, production, supply effect, Vector autoregression, WP

Pages:
28
Volume:
1996
DOI:
https://doi.org/10.5089/9781451934755.001
Issue:
129
Series:
Working Paper No. 1996/129
Stock No:
WPIEA1291996
ISBN:
9781451934755
ISSN:
1018-5941

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