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MONETARY POLICY RULES IN THE RUN-UP TO THE EMU

Research output: Contribution to journalArticlepeer-review

Original languageEnglish
Pages (from-to)687-712
Number of pages26
JournalMetroeconomica
Volume59
Issue number4
DOIs
PublishedNov 2008

King's Authors

Abstract

We characterize central bank behavior in the euro area during the run-up to the European Economic and Monetary Union (EMU) era by estimating Taylor rule-type reaction functions at both the individual and aggregate level. We focus on whether national monetary policies during the run-up to the EMU were responding to economic developments according to their own policy rules or to a broader, euro area-wide, policy rule. To consider the last possibility we examine whether national monetary policies were responding to German interest rates. Finally, we compare the performance of the estimated with imposed policy rules.

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