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The natural real rate of interest in the euro area

Author

Listed:
  • Giammarioli, Nicola
  • Valla, Natacha

Abstract

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

Suggested Citation

  • Giammarioli, Nicola & Valla, Natacha, 2003. "The natural real rate of interest in the euro area," Working Paper Series 233, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:2003233
    Note: 98954
    as

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    File URL: https://www.ecb.europa.eu//pub/pdf/scpwps/ecbwp233.pdf
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    References listed on IDEAS

    as
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    7. Julio Rotemberg & Michael Woodford, 1997. "An Optimization-Based Econometric Framework for the Evaluation of Monetary Policy," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 297-361, National Bureau of Economic Research, Inc.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    euro area; monetary policy; natural rate of interest;
    All these keywords.

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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