@techreport{Gerberding2004Bundesbank,
abstract = {Papers estimating the reaction function of the Bundesbank generally find that its
monetary policy from the 1970s to 1998 can well be captured by a standard Taylor rule
according to which the central bank responds to the output gap and to deviations of
inflation from target, but not to monetary growth. This result is at odds with the
Bundesbank\textasciiacute{}s claim that it followed a strategy of monetary targeting. This paper
analyses whether this apparent contradiction is due to (a) the use of ex post data which
do not necessarily match policy makers? real-time information sets and (b) the omission
of important explanatory variables. Accordingly, we compile a real-time data set for
Germany including the Bundesbank?s own estimates of potential output and use it to reestimate
the Bundesbank?s reaction function. We find that the use of real-time data
considerably changes the results. Moreover, when adding the change in the output gap
as well as deviations of money growth from target to the set of explanatory variables,
we find that both variables are highly significant. This suggests that the Bundesbank
took its monetary targets seriously, but also responded to deviations of expected
inflation and output growth from target.},
author = {Christina Gerberding and Andreas Worms and Franz Seitz},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {E52; E43; E58; 330; Monetary policy; Taylor rule; real-time data; Bundesbank; Geldpolitik; Reaktionsfunktion; Taylor-Regel; Sch\"{a}tzung; Deutschland},
language = {eng},
number = {2004,25},
title = {How the Bundesbank really conducted monetary policy: An analysis based on real-time data},
type = {Discussion paper Series 1 / Volkswirtschaftliches Forschungszentrum der Deutschen Bundesbank},
url = {http://hdl.handle.net/10419/19492},
year = {2004}
}
