Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/26296
Authors: 
Sturm, Jan-Egbert
Wollmershäuser, Timo
Year of Publication: 
2008
Series/Report no.: 
CESifo working paper 2251
Abstract: 
This paper estimates forward-looking Taylor rules for the euro area. Using the asymmetries in inflation and cyclical output developments across countries, we investigate the adequacy of the single monetary policy for each of the European Monetary Union (EMU) member countries. Notable differences emerge across the countries. Taking a euro area perspective, we also show that it depends upon the underlying country weighting scheme in the monetary decision process of the ECB whether or not there has been a synchronisation of business and inflation cycles among the EMU member countries over the years. Finally, we produce an estimate of the actual policy weights the ECB has implicitly attached to each of the member countries. Developments in small member countries have received more than proportional weights in actual monetary policy decisions of the ECB.
Subjects: 
Taylor rule
monetary policy
ECB
stress
business cycle synchronisation
JEL: 
C22
E52
E58
Document Type: 
Working Paper

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