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This article compares two types of monetary policy rules - the Taylor-Rule and the Orphanides-Rule - with respect to their forecasting properties for the policy rates of the European Central Bank. In this respect the basic rules, results from estimated models and augmented rules are compared....
Persistent link: https://www.econbiz.de/10012063951
This article compares two types of monetary policy rules - the Taylor-Rule and the Orphanides-Rule - with respect to their forecasting properties for the policy rates of the European Central Bank. In this respect the basic rules, results from estimated models and augmented rules are compared....
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the Taylor rule is beneficial if the central bank aims at optimally stabilizing inflation and output gap variability under … discretion. Placing a weight on deviations from a simple Taylor rule increases the overall relative weight of inflation … volatility in the effective loss function, which reduces the stabilization bias of discretionary monetary policy. The welfare …
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