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How the Bundesbank Conducts Monetary Policy

Richard Clarida () and Mark Gertler ()

No 5581, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper analyzes German monetary policy in the post-Bretton Woods era. Despite the public focus on monetary targeting, in practice, German monetary policy involves the management of short term interest rates, as it does in the United States. Except during the mid to late 1970s, the Bundesbank has aggressively adjusted interest rates to achieve and maintain low inflation. The performance of the real economy, however, also influences its decision-making. Our formal analysis suggests that the Bundesbank has adjusted short term interest rates according to a modified version of the feedback rule that Taylor (1994) has used to characterize the behavior of the Federal Reserve Board under Alan Greenspan.

JEL-codes: E5 (search for similar items in EconPapers)
Date: 1996-05
Note: IFM ME
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Published as Reducing Inflation: Motivation and Strategy, C. Romer and D. Romer, eds.(Chicago: University of Chicago Press, 1997)
Published as How the Bundesbank Conducts Monetary Policy , Richard H. Clarida, Mark Gertler. in Reducing Inflation: Motivation and Strategy , Romer and Romer. 1997

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Chapter: How the Bundesbank Conducts Monetary Policy (1997) Downloads
Working Paper: How the Bundesbank Conducts Monetary Policy (1996)
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