Recent developments related to the coronavirus pandemic present many challenges to the forecasting institutions in the whole world. National governments react to the changing situation by a continual stream of quarantine measures and accommodative policies. These decisions as well as the response of households and firms in the economy may be hard to predict. The unprecedented nature of the pandemic shock is also accompanied with excessive data uncertainty. This constitutes extraordinary conditions and challenges also for the forecasting at the central banks, including the Czech National Bank. Since the CNB operates in the inflation targeting regime, it relies on its macroeconomic forecast. The „g3+“ DSGE model remains at the core of the forecasting process. However, new instruments and approaches have been employed during the pandemic period as well. This presentation describes the main innovations in the forecasting process at the CNB adopted in response to abovementioned challenges. It also explains and highlights the usefulness of the „g3+“ model even in these extraordinary times.

Stanislav Tvrz works as a senior macroeconomic analyst in the forecasting team of the Monetary Department at the Czech National Bank. Last year, when the Covid-19 pandemic repeatedly hit the economy, he lead the forecasting team at the CNB. Previously, he also worked at the Monetary Department of the National Bank of Slovakia. He earned his Ph. D. in economic policy at the Faculty of Economics and Administration of Masaryk University in Brno. Moreover, he studied applied mathematics at the Faculty of Science of Masaryk University. In his research, he focuses on applying structural models for economic modelling and forecasting with DSGE models.