Did the Bundesbank Follow a Taylor Rule? An Analysis Based on Real-Time Data

Jens Clausen and Carsten-Patrick Meier

Swiss Journal of Economics and Statistics (SJES), 2005, vol. 141, issue II, 213-246

Abstract: Using a real-time data set for German GDP over the period from 1973 to 1998 we calculate various measures of output gaps and use these to calibrate and estimate Taylor-type reaction functions for the Bundesbank. Most of the reaction functions we find fit the Bundesbank's actual policy, as represented by the short-run interest rate, quite well. In contrast to previous findings based on ex post revised data for the output gap, we find the reaction coefficients to resemble quite closely those originally proposed by Taylor for some of our real-time measures of the output gap. Broad monetary aggregates such as M3, in contrast, only played a small role for the Bundesbank's interest rate decisions. Given the good record of the Bundesbank in fighting inflation, the results give support to the use of the Taylor rule for monetary policy.

Keywords: German real-time data; output gap; monetary policy rules (search for similar items in EconPapers)
JEL-codes: E32 E52 (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (46)

Downloads: (external link)
http://www.sjes.ch/papers/2005-II-3.pdf (application/pdf)

Related works:
Working Paper: Did the Bundesbank Follow a Taylor Rule? An Analysis Based on Real-Time Data (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ses:arsjes:2005-ii-3

Access Statistics for this article

Swiss Journal of Economics and Statistics (SJES) is currently edited by Marius Brülhart

More articles in Swiss Journal of Economics and Statistics (SJES) from Swiss Society of Economics and Statistics (SSES) Contact information at EDIRC.
Bibliographic data for series maintained by Kurt Schmidheiny ().