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The Monetary Policy Of The National Bank Of Romania In The Inflation Targeting Era. A Taylor Rule Approach


  • Bogdan CAPRARU

    () („Alexandru Ioan Cuza” University, Ia?i)

  • Norel Ionut MOISE

    () (Bucharest University of Economic Studies)

  • Andrei RADULESCU

    (Institute for World Economy/Romanian Academy, Banca Transilvania, Bucharest)


In this paper we analyse the monetary policy of the National Bank of Romania during 2005-2015 by estimating the Taylor rule, on a quarterly basis. We determined the potential GDP by employing the Hodrick-Prescott filter, in order to distinguish between the cyclical and the structural components of the output. Then, we estimated the traditional Taylor rule function (with a classic OLS regression), but slightly modified, as to take into account the forward-looking attitude of the NBR. The results confirm the direct correlation between the monetary policy rate and the output gap on the one hand, and the inflation differential (inflation – inflationtarget) on the other hand. Also, the results show us that NBR paid a higher attention to the dynamics of the inflation versus its target than to the output gap. Last, but not least, the central bank has been also sensitive to the financial stability, as reflected by the results of the incorporation of the ROBOR-EURIBOR spread in the classical Taylor rule.

Suggested Citation

  • Bogdan CAPRARU & Norel Ionut MOISE & Andrei RADULESCU, 2015. "The Monetary Policy Of The National Bank Of Romania In The Inflation Targeting Era. A Taylor Rule Approach," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 16, pages 91-102, December.
  • Handle: RePEc:aic:revebs:y:2015:d:16:caprarub

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    References listed on IDEAS

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