We demonstrate that average interest rates in the EMU countries in 1990-98, with the exception of the period of exchange market turmoil in 1992-93, moved very closely in relation to average output gaps and inflation as suggested by the Taylor rule.
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Citation
Gerlach, S and G Schnabel (1999), ‘DP2271 The Taylor Rule and Interest Rates in the EMU Area‘, CEPR Discussion Paper No. 2271. CEPR Press, Paris & London. https://cepr.org/publications/dp2271
