The specification of the central bank’s reaction function in the terms proposed by Taylor (1993) allows us to determine the extent to which monetary policy is sensitive to the basic objectives of economic policy, such as the deviation of the inflation rate from a given target, and that of real output from its potential level. In this paper, we try to evaluate whether the monetary policy performed by the Bank of Spain during the period 1978-1998, could be described by a Taylor-type rule taking into account the open economies’ conditioning factors.

Key words: Taylor rule, monetary policy, inflation.
JEL classification: E52, E58.