Taylor rule for the conduct of monetary policy objectives in the case of Algeria

Abstract

The goal of this study is to determine the optimal Taylor rule within inflation gap and GDP Gap under Inflation Targeting in the case of Algeria through an empirical analysis using a GMM (Generalized Method of Moments) upon quarterly data for the period 2003-2017. Results show that the impact of money market rate has a negligible effect on inflation and economic activity. Main Findings and results of this paper argue that the implantation an implicit inflation targeting framework using Taylor rule have become more suitable to conduct and improving monetary policy performance.