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Monetary Policy Rules For European Monetary Union Acceding Countries

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  • POPESCU Iulian Vasile

    (Alexandru Ioan Cuza University of Iasi, Romania)

Abstract

The identification of central banks (CBs) behavior in setting interest rates may give a conclusive image on both the objectives and on their prioritization. A standard approach in this respect is the estimation of a CB reaction function as a Taylor rule. Since the formulation of the original version, Taylor monetary policy rule has undergone a number of changes and extensions designed to better reflect the monetary policy decisions of central banks. This paper addresses two extensions of Taylor monetary policy rule strictly targeting the current features of the Central and Eastern European (CEE) states, emerging economies with a high degree of openness in the middle of a convergence process towards the euro area. Models are built on the assumption that the monetary authority follows a strategy of flexible inflation targeting (IT) and are estimated using the generalized method of moments (GMM).

Suggested Citation

  • POPESCU Iulian Vasile, 2013. "Monetary Policy Rules For European Monetary Union Acceding Countries," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 8(2), pages 108-122, August.
    • Handle: RePEc:blg:journl:v:8:y:2013:i:2:p:108-122
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    File URL: http://eccsf.ulbsibiu.ro/RePEc/blg/journl/8212popescu.pdf
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    References listed on IDEAS

    as
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