Work

Taylor Rules and the Deutschmark-Dollar Real Exchange Rate

Year: 2004

Type: report

Abstract: We explore the link between an interest rate rule for monetary policy and the behavior of the real exchange rate.The interest rate rule, in conjunction with some standard assumptions, implies that the deviation of the real exchange rate from its steady state depends on the present value of a weighted sum of inflation and output gap differentials.The weights are functions of the parameters of the interest rate rule.An initial look at German data yields some support for the model.

Source: National Bureau of Economic Research

DOI: 10.3386/w10995

Authors: Charles Engel, Kenneth West

Institutions: National Bureau of Economic Research, University of Wisconsin–Madison

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

Funder: National Science Foundation

OpenAlex ID: W2148359781

Cites: 50

Cited by: 180

Related to: 10