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The Taylor rule and interest rates in the EMU area: a note

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  • Gert Schnabel
  • Stefan Gerlach

Abstract

We demonstrate that average interest rates in the EMU countries in 1990-98, with the exception of the period of exchange market turmoil in 1992-93, moved very closely with average output gaps and inflation as suggested by the Taylor rule.

Suggested Citation

  • Gert Schnabel & Stefan Gerlach, 1999. "The Taylor rule and interest rates in the EMU area: a note," BIS Working Papers 73, Bank for International Settlements.
  • Handle: RePEc:bis:biswps:73
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    References listed on IDEAS

    as
    1. Glenn Rudebusch & Lars E.O. Svensson, 1999. "Policy Rules for Inflation Targeting," NBER Chapters, in: Monetary Policy Rules, pages 203-262, National Bureau of Economic Research, Inc.
    2. Gert Peersman & Frank Smets, 1999. "The Taylor Rule: A Useful Monetary Policy Benchmark for the Euro Area?," International Finance, Wiley Blackwell, vol. 2(1), pages 85-116, April.
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