The Taylor rule in question 19 is thought to be a reasonably good description of policy behavior

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The Taylor rule in question 19 is thought to be a reasonably good description of policy behavior in the United States in the absence of unusual financial market conditions or deflationary worries. Taking into account what you know about the policy goals of the ECB and that the average economic growth rate tends to be lower in Europe than in the United States, how would you amend the Taylor rule to better approximate policymaking behavior by the ECB?

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Money Banking and Financial Markets

ISBN: 978-0078021749

4th edition

Authors: Stephen Cecchetti, Kermit Schoenholtz

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