TY  - JOUR
AU  - Engel,Charles
AU  - West,Kenneth D.
TI  - Taylor Rules and the Deutschmark-Dollar Real Exchange Rate
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10995
PY  - 2004
Y2  - December 2004
UR  - http://www.nber.org/papers/w10995
L1  - http://www.nber.org/papers/w10995.pdf
N1  - Author contact info:
Charles Engel
Department of Economics
University of Wisconsin
1180 Observatory Drive
Madison, WI  53706-1393
Tel: 608/262-3697
Fax: 608/262-2033
E-Mail: cengel@ssc.wisc.edu

Kenneth D. West
Department of Economics
University of Wisconsin
1180 Observatory Drive
Madison, WI  53706
Tel: 608/262-0033
Fax: 608/262-2033
E-Mail: kdwest@wisc.edu
AB  - We explore the link between an interest rate rule for monetary policy and the behavior of the real exchange rate. The interest rate rule, in conjunction with some standard assumptions, implies that the deviation of the real exchange rate from its steady state depends on the present value of a weighted sum of inflation and output gap differentials. The weights are functions of the parameters of the interest rate rule. An initial look at German data yields some support for the model.
ER  -