The natural real rate of interest in the euro area
In this paper, we discuss the consequences of taking inot account the variations of the natural real interest rate (rt*) in simple monetary policy rules. We also provide one possible model-based analysis of the level of rt* that has prevailed in the euro area since the early 1970s, and present the implied 'real rate rate gap' as a possible additional indicator to assess the stance of monetary policy. JEL Classification: E4, E5
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