Monetary Policy in the Euro Area: A Country by Country Look at the Effectiveness of the Taylor Rule

This paper aims to use different Taylor rules in analyzing the interest rate for the Euro Area. The Euro Area was chosen because it consists of all the countries that use the Euro. The European Central Bank also behaves with the national banks in much the same as manner as the US Federal Reserve Bank system. The Taylor rule is used because the main objective of the Euro Area is price stability. Two different Taylor rules are used in this paper: simple Taylor rule, and dynamic Taylor rule. Each Taylor rule is also broken down to include the individual country coefficients. This allows for the effect each country has on the Euro Area\u27s monetary policy to be determined