Work

Policy rules and the inflation surge: The case of the ECB

Year: 2025

Type: article

Abstract: This paper investigates the implications of monetary policy rules during the surge and subsequent decline of inflation in the euro area and compares them to the interest rate decisions of the European Central Bank. It focuses on versions of the Taylor (1993) and Orphanides and Wieland (2013) rules. Rules that respond to recent outcomes of HICP core or domestic inflation data called for raising interest rates in 2021—well ahead of the rate hikes of the ECB. Thus, simple outcome-based rules deserve more attention in the ECB's monetary policy strategy. Interestingly, the rules support the shift to policy easing in 2024.

Source: Economics Letters

DOI: 10.1016/j.econlet.2025.112338

Authors: Balint Tatar, Volker Wieland

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: hybrid

Estimated APC paid: $3,030

OpenAlex ID: W4409424061

FWCI: 9.675

Cites: 11

Cited by: 5

Related to: 10