Can the behavior of central banks help predict dramatic changes in the economic climate in any geographical region

Ing. Raunak Raunak

Master's thesis

Abstract:

Central banks are at the core of an economy. They manage a country’s currency, money supply and interest rates. Most of them were born out of financial or economic crisis in a country/state’s history. At present, almost every country has its own central bank. While all roles and functions of a central bank vary from country to country, all serve the same purpose of maintaining the economic stability of the region. Given their importance, I aim in this paper to do a case study based research, and try to see if studying their behaviour and behavioural patterns around economic crisis can give us some clue about advent of drastic changes in economies. Focus of this paper will be primarily on European banks. I will study their behaviour around the great recession and look for patterns in it. If successful, I will then try to extend these patterns to other countries for verification of the hypothesis.

Abstract:

Central banks are at the core of an economy. They manage a country’s currency, money supply and interest rates. Most of them were born out of financial or economic crisis in a country/state’s history. At present, almost every country has its own central bank. While all roles and functions of a central bank vary from country to country, all serve the same purpose of maintaining the economic stability of the region. Given their importance, I aim in this paper to do a case study based research, and try to see if studying their behaviour and behavioural patterns around economic crisis can give us some clue about advent of drastic changes in economies. Focus of this paper will be primarily on European banks. I will study their behaviour around the great recession and look for patterns in it. If successful, I will then try to extend these patterns to other countries for verification of the hypothesis.

Keywords

Central Banks, Central bank independence, Central bank behaviour, Financial Crisis, Recession, Inflation, Interest rates, Economic climate, Czech National Bank, Bank of England, European Central Bank, Swedish National Bank, National Bank of Denmark, GDP, Economic indicators, Unemployment, Tylor rule.

Language used: English

Date on which the thesis was submitted / produced: 28. 4. 2017

Thesis defence

• Date of defence: 19. 6. 2017
• Supervisor: MBA Jiří Vicek
• Reader: MSc Oldřich Dutý

University of Finance and Administration

Master programme / field:
Economics and Management / Business Management and Corporate Finance