IDEAS home Printed from https://ideas.repec.org/p/sek/iacpro/4106716.html
   My bibliography  Save this paper

Taylor Rules and the interest rate behavior in Algeria

Author

Listed:
  • Saloua Nassima Chaouche

    () (ENSSEA)

  • Rachid Toumach

    () (ENSSEA)

Abstract

The Taylor rules represent a guideline for central bank while setting their monetary policy in the aim to ensure the macroeconomic stability. The estimated Taylor rule and McCallum rule can be considered as a benchmark explicit formula for the central bank to follow when making monetary policy decisions. The Taylor rules capture the essential of the monetary authority?s behavior, and determine the level of short term interest rates compatible with price stability, keeping the output at its potential level. The gap between the rule?s rate and the observed one is used as an indicator of the appropriatemonetary policy with respect to inflation targeting and output gap targeting. In this work, we tried to asses if the short term interest rates announced by the Algerian Central Bank, fit the different version of The Taylor rule. It is an attempt to assesses the operational performance of three version of the Taylor rules in Algeria over the period 1996?2011 using quarterly data, with a view to analytically informing the conduct of monetary policy. The different estimations showed that the Taylor rule can be somehow and in some version the appropriate predictor of interest rate behavior in Algeria.

Suggested Citation

  • Saloua Nassima Chaouche & Rachid Toumach, 2016. "Taylor Rules and the interest rate behavior in Algeria," Proceedings of International Academic Conferences 4106716, International Institute of Social and Economic Sciences.
  • Handle: RePEc:sek:iacpro:4106716
    as

    Download full text from publisher

    File URL: https://iises.net/proceedings/25th-international-academic-conference-oecd-paris/table-of-content/detail?cid=41&iid=011&rid=6716
    File Function: First version, 2016
    Download Restriction: no

    References listed on IDEAS

    as
    1. Taylor, John B., 1999. "The robustness and efficiency of monetary policy rules as guidelines for interest rate setting by the European central bank," Journal of Monetary Economics, Elsevier, vol. 43(3), pages 655-679, June.
    2. Ghosh, Atish R. & Ostry, Jonathan D. & Chamon, Marcos, 2016. "Two targets, two instruments: Monetary and exchange rate policies in emerging market economies," Journal of International Money and Finance, Elsevier, vol. 60(C), pages 172-196.
    3. Barro, Robert J & Gordon, David B, 1983. "A Positive Theory of Monetary Policy in a Natural Rate Model," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 589-610, August.
    4. Richard Clarida & Jordi Galí & Mark Gertler, 2000. "Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory," The Quarterly Journal of Economics, Oxford University Press, vol. 115(1), pages 147-180.
    5. Sharon Kozicki, 1999. "How useful are Taylor rules for monetary policy?," Economic Review, Federal Reserve Bank of Kansas City, vol. 84(Q II), pages 5-33.
    6. Mésonnier, J-S. & Renne, J-P., 2004. "Règle de Taylor et politique monétaire dans la zone euro," Working papers 117, Banque de France.
    7. Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
    8. Chris Plantier & Dean Scrimgeour, 2002. "The Taylor Rule and its relevance to New Zealand monetary policy," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 65, March.
    9. Patrick Lünnemann & Abdelaziz Rouabah, 2003. "Règle de Taylor: estimation et interprétation pour la zone euro et pour le Luxembourg," BCL working papers 9, Central Bank of Luxembourg.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Monetary policy; Taylor?s rule; Interest rate ; Forward-looking ; Smoothing Interest rate ; Backward-looking;

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • A00 - General Economics and Teaching - - General - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sek:iacpro:4106716. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Klara Cermakova). General contact details of provider: https://iises.net/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.