STRUCTURAL CHANGE OF THE CZECH ECONOMY

The goal of this paper is to estimate timing and shape of a structural change (regime switch) of the Czech economy, which took place at the end of the nineties. The approach we have chosen is based on Dynamic Stochastic General Equilibrium (DSGE) model with Mar ing regimes. In order to keep the estimate meaningful with respect to the number of parameters (model complexity) and the length of Czech macroeconomic time series, we have chosen a small prototypical New Keynesian model. This model has been estimated by Bayesian techniques. The results do not consist of parameter estimates for different regimes only, but also of probabilities of the..;e regimes in time. This offers very interesting view of the changes the Czech economy went through in the second half of the nineties.