Working Paper: CEPR ID: DP2271
Authors: Stefan Gerlach; Gert Schnabel
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 in relation to average output gaps and inflation as suggested by the Taylor rule.
Keywords: ECB; Taylor Rule
JEL Codes: E5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| output gap (E23) | average interest rates (E43) |
| inflation (E31) | average interest rates (E43) |
| Taylor rule (E43) | average interest rates (E43) |
| average interest rates during exchange market turmoil (F31) | average interest rates (E43) |
| adopting Taylor rule (E43) | stabilization of monetary policy (E63) |