Comparing monetary policy rules in a small open economy framework: An empirical analysis using Bayesian techniques

Sabine Eschenhof

No 197, Darmstadt Discussion Papers in Economics from Darmstadt University of Technology, Department of Law and Economics

Abstract: This paper examines the role of exchange rate changes in the monetary policy for the Euro Area. Moreover, it compares different Taylor-type policy rules with respect to the numerical results as well as the impulse responses to exogenous shocks and the fit of the different data model specifications when using the underlying data. Overall, a monetary policy rule which includes the expected inflation rate as well as the output gap performs best and supports a possible role of exchange rate changes in the Euro Area's monetary policy.

Keywords: Bayesian Estimation; Small Open Economy; Monetary Policy; Taylor Rule (search for similar items in EconPapers)
JEL-codes: C11 E52 F41 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:darddp:dar_40392

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