Abstract
The role of stock and currency market information in a forward-looking Taylor rule is analysed for monthly data from 13 OECD countries and the U.S. during the years 1988-2012. Based on a simple set of partial equilibrium conditions we fi nd that the stock market information in the form of dividend yield and the currency market information in the form of real exchange rate are especially relevant and actually instrumental in the GMM analysis of the Taylor rule or many of the countries examined in terms of obtaining a signi cant role for the traditional Taylor rule policy variables, that is, inflation and real economic activity deviations. In many cases the rule also seems to be opportunistic, i.e., at least in the short term the inflation target has been time-varying.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
