Latocha, Renata Grzeda; Nerb, Gernot - In: Journal of Business Cycle Measurement and Analysis 2004 (2004) 1, pp. 43-69
Interest rates play a key role in free market economies. According to the Taylor rule, shortterm interest rates depend on deviations of the current inflation rate from a normative value and of the output gap. Given the difficulty of observing the output gap, we postulate that alternative...