The McCallum Rule and 25 Years of Euro-Area Monetary Policy
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The McCallum Rule and 25 Years of Euro-Area Monetary Policy
Introduction: Why Monetary Policy Needs a Firm Theoretical Foundation Monetary policy is fundamentally about stabilising nominal spending — nominal GDP — to support economic growth and maintain price stability. For the euro area, this challenge is particularly complex given structural differences across member states, asymmetric shocks, and the unique institutional arrangement of monetary union without fiscal union. Traditional frameworks have l…
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