European Business Schools Librarian's Group

ESSEC Working Papers,
ESSEC Research Center, ESSEC Business School

No DR 02008: ECB Monetary Policy Rule: Some Theory and Empirical Evidence

André Fourçans () and Radu Vranceanu ()
Additional contact information
André Fourçans: ESSEC Business School, Postal: Avenue Bernard Hirsch - B.P. 105, 95021 CERGY PONTOISE CEDEX France
Radu Vranceanu: ESSEC Business School, Postal: Avenue Bernard Hirsch - B.P. 105, 95021 CERGY PONTOISE CEDEX France

Abstract: This paper estimates different monetary policy rules for the ECB with montly data during the period 1999.04-2002.02. The results show that the ECB exhibits a rather conservative behavior: a 1 percentage point increase in the inflation rate above its target brings about a 1,2 percentage point increase in the interest rate. Like the FED, its policy is influenced by real activity. The Bank also smoothes changes in interest rates over time. Despite the announced money growth "reference value", it does not reacts to changes in M3 growth rates.

Keywords: ECB; Taylor'srule; monetary policy; inflation

JEL-codes: C51; E52; E58

14 pages, August 2002

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