Post-1990 monetary policy and private consumption

The author explores possible ways of evaluating the effects of Czech moneta ry policy in 1991-1999, and compares the economy of the Czech Republic with those of other Central and Eastern European countries (Hungary, Poland, Sl ovakia, Slovenia, Latvia, Lithuania and Estonia). In recent years the Czech economy achieved some success in curbing inflation. However Mandel investi gates the wider effects of monetary policy on private consumption. He opens by setting forth his methodological starting points: macroeconomic identit y for private consumption and the relationships between: inflation and the growth of real GDP; exchange-rate stability and the trade-balance developme nt; growth of money supply and foreign debt; and real interest rate and the efficiency of private investments. He concludes that the lowest rate of in flation in the Czech Republic was closely related to the slowest real econo mic growth between the tested countries. On the contrary, the policy of nom inal exchange-rate stability has been connected with significant improvemen t (2.45% yearly) in terms of trade. This implies positive effects on privat e consumption corresponding with a 1% y-on-y growth of real GDP.