Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/3141 
Year of Publication: 
2003
Series/Report no.: 
IWP Discussion Paper No. 2003/2
Publisher: 
Universität zu Köln, Institut für Wirtschaftspolitik (iwp), Köln
Abstract: 
Using a real-time data set for German GDP over the period from 1973 to 1998 we calculate various measures of real-time 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 realtime 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.
Subjects: 
German real-time data
output gap
monetary policy rules
JEL: 
E52
E32
Document Type: 
Working Paper

Files in This Item:
File
Size
453.67 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.