The Natural Real Rate of Interest in the Euro Area

47 Pages Posted: 2 Dec 2003

See all articles by Nicola Giammarioli

Nicola Giammarioli

European Central Bank (ECB)

Natacha Valla

European Union - European Investment Bank; European Central Bank (ECB); Banque de France

Date Written: May 2003

Abstract

In this paper, we discuss the consequences of taking into account the variations of the natural real interest rate (rt*) in simple monetary policy rules. We also provide one possible model-based analysis of the level of rt* that has prevailed in the euro area since the early 1970s, and present the implied "real rate gap" as a possible additional indicator to assess the stance of monetary policy.

Keywords: Natural rate of interest; monetary policy; euro area

JEL Classification: E4, E5

Suggested Citation

Giammarioli, Nicola and Valla, Natacha, The Natural Real Rate of Interest in the Euro Area (May 2003). Available at SSRN: https://ssrn.com/abstract=457283 or http://dx.doi.org/10.2139/ssrn.457283

Nicola Giammarioli (Contact Author)

European Central Bank (ECB) ( email )

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Natacha Valla

European Union - European Investment Bank ( email )

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European Central Bank (ECB) ( email )

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