BUSINESS-CYCLE IN CZECHOSLOVAKIA UNDER CENTRAL PLANNING - WERE CREDITSHOCKS CAUSING IT

This paper examines credit origins of the business cycle in the former Czechoslovakia. Industrial production is found to be cointegrated wit h various measures of bank credit during 1976-1990. Noninvestment cred its are shown to be Granger-causing industrial production and a feedba ck relation exists between investment credits and industrial productio n. Although the impact of credit supply shocks on industrial productio n has been changing, production decline (growth) seems to follow credi t tightening (loosening). However, the paper confirms that credit shoc ks were only a minor part of the output decline in 1989-1990. (C) 1998 Academic Press.