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On the Robustness of the "Taylor Rule" in the EMU Author info | Abstract | Publisher info | Download info | Related research | Statistics Maria ELEFTHERIOU
Following a policy rule mechanically when operating monetary policy is neither realistic nor practical. Nevertheless, monetary policy rules have received a great deal of attention in recent macroeconomic research. The paper focuses on a famous interest rate rule, namely the Taylor Rule, to show that the rule parameters are robust to most of the output gap measures and the specifications considered, i.e. the inflation coefficient is above unity and the output gap coefficient is positive. The estimated rule is shown to track the actual policy performance during the EMU period remarkably well. In addition, the estimated rule is used as an indicator of macroeconomic convergence in the union and it is demonstrated that the optimal EMU rate has not been in accordance with domestic conditions in certain countries.
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Paper provided by European University Institute in its series Economics Working Papers with number
ECO2003/17.
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Date of creation: 2003Date of revision:
Handle: RePEc:eui:euiwps:eco2003/17Contact details of provider: Postal: Badia Fiesolana, Via dei Roccettini, 9, 50016 San Domenico di Fiesole (FI) Italy Phone: +39-055-4685.982 Fax: +39-055-4685.902 Web page: http://www.eui.eu/ECO/ More information through EDIRC
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Keywords: Find related papers by JEL classification: E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
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"Monetary Policy Rules in Practice: Some International Evidence ,"
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Leon, Costas, 2006.
"The Taylor rule: can it be supported by the data? ,"
MPRA Paper
1650, University Library of Munich, Germany.
[Downloadable!]
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